The cost-allocation method that allocates each support-department's costs to operating departments only is the ________.
A) direct method
B) single-rate cost allocation method
C) step-down method
D) reciprocal method

Question

Quizplus · Accepted Answer

The direct method only allocates each support department's costs directly to operating departments, without considering any interactions between support departments. It is the simplest and easiest to implement, but may not provide an accurate reflection of the true cost of each department's activities if there are significant interactions between support departments. The single-rate method and step-down method both consider interactions between support departments, but the reciprocal method is the most accurate and complex method that considers all interactions between support departments.

The Cost-Allocation Method That Allocates Each Support-Department's Costs to Operating