The direct allocation method ________.
A) does not allocate support department costs to other support departments
B) uses information about reciprocal services provided among support departments and can therefore lead to inaccurate estimates of the cost of operating departments
C) allocates complete reciprocated costs
D) offers key input for outsourcing decisions

Question

Quizplus · Accepted Answer

The direct allocation method only allocates support department costs to operating departments, and does not allocate costs to other support departments. Therefore, option A is the correct answer. Option B refers to the reciprocal allocation method, which accounts for the services provided among support departments. Option C is incorrect because the direct method does not consider complete reciprocated costs. Option D may or may not be true, but it is not directly related to the characteristics of the direct allocation method.

The Direct Allocation Method ________