The direct and step-down methods of allocating support activity costs differ from the reciprocal method in that the reciprocal method uses a dual-rate allocation.

Question

Quizplus · Accepted Answer

The direct and step-down methods do not account for the mutual services exchanged between support departments, whereas the reciprocal method does by solving simultaneous equations to allocate costs more accurately.

The Direct and Step-Down Methods of Allocating Support Activity Costs