In both the direct and step-down methods of allocating service department costs, any amount of the allocation base that is attributable to the service department whose cost is being allocated is ignored.

Question

Quizplus · Accepted Answer

In both methods, the allocation base is used to distribute the service department costs to the production departments. The portion of the allocation base that is attributable to the service department itself is eliminated, as it is not necessary to allocate costs to oneself.

In Both the Direct and Step-Down Methods of Allocating Service