Which of the following principles should be applied when the step method of allocating service department costs is used?
A)The sequence of allocation among departments should be randomly selected.
B)The sequence of allocation among departments should proceed from the largest department as measured by total assets to the smallest.
C)The sequence of allocation among departments should proceed from the largest provider of interdepartmental services to the smallest.
D)All possible sequences of service department allocations should be computed. The sequence that provides the largest allocation of service costs should then be selected.

Question

Quizplus · Accepted Answer

The step method of allocating service department costs should proceed from the largest provider of interdepartmental services to the smallest. This ensures that the department most responsible for using and benefiting from the services is allocated the appropriate amount of costs. Allocating based on total assets or randomly selecting the sequence would not be appropriate in this case. The computation of all possible sequences to select the largest allocation of costs would also not be necessary or feasible.

Which of the Following Principles Should Be Applied When the Step