Which of the following statements is(are)false regarding the direct method of allocating service department costs? (A)The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method.(B)Once an allocation is made from a service department using the direct method,no further allocations are made back to that department.
A) Only A is false.
B) Only B is false.
C) Neither A nor B is false.
D) Both A and B are false.

Question

Quizplus · Accepted Answer

The direct method of allocating service department costs is a one-step process that allocates costs directly from the service department to the producing departments. The step method, on the other hand, is a multi-step process that allocates costs from one service department to another until all costs have been allocated to the producing departments. Therefore, the selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method.Once an allocation is made from a service department using the direct method, no further allocations are made back to that department. This is because the direct method allocates costs directly to the producing departments, and there is no need to allocate costs back to the service departments.

Which of the Following Statements Is(are)false Regarding the Direct Method