Under reciprocal cost allocation method:
A)the first step is to develop a reciprocal cost equation.
B)the first step is to allocate the service department costs to the production departments.
C)one service department is chosen to allocate costs first.
D)service department costs are allocated directly to the production departments.

Question

Quizplus · Accepted Answer

The reciprocal cost allocation method involves developing reciprocal cost equations as the first step to account for the mutual services exchanged between service departments before allocating costs to the production departments.

Under Reciprocal Cost Allocation Method