Question

The wages paid to maintenance department workers who do repair work principally for production departments and also for the vehicles in the distribution department should be charged as _________________.

• A. Distribution costs
• B. Production costs
• C. Service costs
• D. General costs

Answer 1

The correct option is C Service costs

Maintenance department is a service department which provides service to all the departments including the production and distribution department.

Cost of wages of such department should be allocated to all the department as a service cost as per the accurate basis of allocation.