The terms "direct," "step-down," and "reciprocal" are associated with which part of allocating support department costs?
A) Clarifying the purpose of the allocation
B) Choosing and applying a method
C) Allocating costs to units of product or service
D) Choosing an allocation base

Question

Quizplus · Accepted Answer

The terms "direct," "step-down," and "reciprocal" are all related to the process of choosing and applying a method for allocating support department costs. Therefore, the correct answer is B. These terms describe different approaches to allocating indirect costs to products, services, or other units. Clarifying the purpose of the allocation, choosing an allocation base, and allocating costs to units of product or service are all important steps in the allocation process, but they are not directly related to these specific terms.

The Terms "Direct," "Step-Down," and "Reciprocal" Are Associated with Which