A method for allocating service department costs that ignores other service departments when any given service department's costs are allocated to the revenue-producing departments is called the
A) direct method.
B) indirect method.
C) step-down method.
D) step-up method.

Question

Quizplus · Accepted Answer

The direct method only allocates the costs of a single service department directly to the revenue-producing department without considering the costs of other service departments. This method is simple but may not accurately reflect the true cost of the service provided by the service department. The indirect method and step-down method both consider the costs of multiple service departments, while the step-up method is not a commonly used allocation method.

A Method for Allocating Service Department Costs That Ignores Other