(Appendix 4B)Which of the following statements about the step-down method of allocating service department is correct?
A) It is a less accurate method of allocation than the direct method.
B) It cannot be used when a company has more than two service departments.
C) It is a simpler allocation than the direct method.
D) It ignores some interdepartmental services.

Question

Quizplus · Accepted Answer

The step-down method allocates service department costs to other service departments and production departments, but it does not fully account for interdepartmental services among service departments, as it allocates costs in a sequential manner.

(Appendix 4B)Which of the Following Statements About the Step-Down Method