(Appendix 4B)What allocation method recognizes that service departments often provide each other with interdepartmental services,and it is therefore considered to be the most accurate method for allocating service department costs to operating departments?
A) The direct method.
B) The step-down method.
C) The reciprocal method.
D) The allocation by cost behaviour method.

Question

Quizplus · Accepted Answer

The reciprocal method recognizes that service departments provide each other with interdepartmental services and therefore allocates costs between service departments and operating departments based on services provided and received among all departments. This method is considered the most accurate allocation method for service department costs.

(Appendix 4B)What Allocation Method Recognizes That Service Departments Often Provide