The support department cost allocation method that completely ignores reciprocal services between support departments is called the:
A) direct method.
B) step-down method.
C) reciprocal method.
D) direct method AND step-down method.

Question

Quizplus · Accepted Answer

The direct method ignores the reciprocal services between support departments and allocates support department costs directly to production departments. This method is simple and easy to understand but may lead to inaccurate cost allocations. The step-down method and the reciprocal method take into account the reciprocal services between support departments. The direct method and step-down method are not the same as the direct method does not consider reciprocal services between support departments.

The Support Department Cost Allocation Method That Completely Ignores Reciprocal