Which of the following is one of the methods of allocating support department costs to operating departments?
A) dual-cost allocation method
B) incremental method
C) step-down method
D) single-rate cost allocation method

Question

Quizplus · Accepted Answer

The step-down method is one of the methods of allocating support department costs to operating departments. It involves allocating costs from the support department that has the highest total cost to the other support departments and operating departments based on a predetermined hierarchy. This method recognizes that some support departments provide services to other support departments before providing services to operating departments, and allocates costs accordingly. The other options listed are also methods of allocating support department costs, but the step-down method is considered more accurate as it recognizes the interdependencies between support departments.

Which of the Following Is One of the Methods of Allocating