The cost incurred by departments that support the production departments with such activities as maintenance, production control and storage are called?

The cost incurred by departments that support the production departments with such activities as maintenance, production control and storage are called?

Answer Details

The cost incurred by departments that support the production departments with activities such as maintenance, production control, and storage are called "service costs." These costs are associated with the services provided by support departments to the production departments, which help them carry out their production activities efficiently. For example, maintenance departments ensure that the production machinery is in good working condition, production control departments coordinate production schedules and ensure that materials and resources are available when needed, and storage departments provide storage facilities for raw materials and finished products. Service costs are indirect costs that are not directly related to the production of goods or services, but they are necessary to ensure that the production process runs smoothly. The cost of these services is allocated to the production departments based on a predetermined formula, such as the number of hours of service provided or the square footage of space used. Therefore, the correct answer to the question is "service costs."