The method of distributing service department costs to production departments that takes into consideration that service departments not only may provide service to but also may receive service from other service departments is the:
A)Direct distribution method.
B)Sequential distribution method.
C)Service department distribution method.
D)Reciprocal method.

Question

Quizplus · Accepted Answer

The reciprocal method is the best choice in this scenario because it considers the reciprocal (both ways) flow of services between service departments. This method results in more accurate cost allocations and better reflects the actual cost of service department support provided to the production departments.

The Method of Distributing Service Department Costs to Production Departments