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

A. autonomous costs
B. service costs
C. supporting cost
D. subsidiary costs

Correct Answer:

Option B – service costs

Explanation

Service costs are the costs incurred to provide or deliver a service. They have the element of manufacturing cost but are not directly involved in the production. They include costs such as the use of power and water; fees for use of furniture carpeting/curtains, costs such as cleaning of common areas, costs of concierge, or maintenance of the common garden.