When the step-down method is used to allocate support department costs, a common way to select the first support department in the sequence is to choose the support department which:
A) obtains the highest yield.
B) serves no other support department.
C) serves the greatest number of other support departments.
D) obtains the highest yield AND serves no other support department.

Question

Quizplus · Accepted Answer

The step-down method involves allocating the costs of support departments to production departments. The first support department selected in the sequence should be the one that serves the greatest number of other support departments, as it will have the most significant impact on the allocation of costs to the other support departments and will allow for a more accurate allocation of expenses.

When the Step-Down Method Is Used to Allocate Support Department