Question

Which of the following is not a step in creating operating department income statements? eliminate the uncontrollable costs for each department. allocate indirect expenses across departments. prepare the departmental income statements. accumulate revenues and direct expenses by department. allocate service department expenses to operating departments?

Answer 1

The step that is not considered a part of creating the operating department income statement would be "eliminate the uncontrollable costs for each department." Uncontrollable costs are obviously, still a part of the total cost of operation and should be included in the financial statements even though the manager does not have control with it.