(Appendix 11A)Grant Company has several service departments that provide services to each other as well as to operating departments within the company.Which method would be least accurate in allocating the company's service department costs?
A) The sequential method.
B) The direct method.
C) The step-down method.
D) The reciprocal methoD.

Question

Quizplus · Accepted Answer

The direct method would be the least accurate in allocating the company's service department costs because it does not take into account the interdependence and reciprocal relationships between service departments. This method only allocates service department costs directly to operating departments without considering the fact that service departments may also receive services from other service departments. The direct method also does not provide any information on the cost of providing services by each service department. Therefore, it is not an appropriate method for allocating service department costs in a complex organizational structure.

(Appendix 11A)Grant Company Has Several Service Departments That Provide Services