The step-down method of allocating service department costs:
A) is a less accurate method of allocation than the direct method.
B) can't be used when a company has more than two service departments.
C) is a simpler allocation method than the direct method.
D) ignores some interdepartmental services.

Question

Quizplus · Accepted Answer

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

The Step-Down Method of Allocating Service Department Costs