The method of allocating service department costs that allocates the costs to both service departments and operating departments is the:
A) direct method.
B) indirect method.
C) weighted-average method.
D) step method.

Question

Quizplus · Accepted Answer

The step method allocates service department costs to both service departments and operating departments. It is a more accurate method than the direct method and less complex than the weighted-average method. The indirect method only allocates service department costs to operating departments, not to other service departments.

The Method of Allocating Service Department Costs That Allocates the Costs