Which of the following statements is false regarding the six-step process as it is utilized in the reciprocal services method?
A)Steps 1-3 of the reciprocal services method are the same as for the direct and sequential methods.
B)In Step 4, the proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated is determined.
C)In Step 5, support department costs are allocated sequentially among the departments by using a single algebraic equation.
D)In Step 6, production department costs are applied to products.

Question

Quizplus · Accepted Answer

In Step 5 of the reciprocal services method, support department costs are allocated by solving a set of simultaneous equations, not sequentially using a single algebraic equation. This distinguishes it from the sequential method and allows for the mutual services between support departments to be accurately accounted for.

Which of the Following Statements Is False Regarding the Six-Step