The cost-allocation method that allocates support department costs only to production departments is the:
A)direct method
B)sequential method
C)step-down method
D)reciprocal method

Question

Quizplus · Accepted Answer

The direct method is a cost-allocation method that allocates support department costs directly to production departments without taking into account the costs of other support departments. This approach is relatively simple and easy to apply but may result in inaccurate cost allocations if there are significant interactions between support departments. In this case, the direct method is appropriate because it only allocates support department costs to production departments, and there is no indication of interactions between support departments. The sequential method and the step-down method are more complex and take into account the costs of other support departments, while the reciprocal method considers the costs of all support departments and is the most accurate but also the most complex.

The Cost-Allocation Method That Allocates Support Department Costs Only to Production