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 sequentially and not reciprocally.

Which of the Following Statements About the Step-Down Method of Allocating