The greatest virtue of the step-down method for allocating service department costs is ________.
A)its simplicity
B)its ability to allocate production department costs to service departments
C)its ability to allocate user department costs to production departments
D)the recognition of reciprocal relationships between service departments

Question

Quizplus · Accepted Answer

The greatest virtue of the step-down method for allocating service department costs is its recognition of reciprocal relationships between service departments. This means that the costs of one service department can be allocated based on the extent to which it serves other service departments, which can provide a more accurate and fair allocation of costs. The method also allows for the allocation of production department costs to service departments, but this is not its greatest virtue. Allocating user department costs to production departments is not part of the step-down method.

The Greatest Virtue of the Step-Down Method for Allocating Service