What will be the difference in the total service department costs allocated between the step-method and the direct-method?
A) The step method results in more total cost being allocated to producing departments
B) The direct method results in more total cost being allocated to producing departments
C) There is no difference in the amount of total cost being allocated to producing departments
D) The answer depends on how many service departments are allocated

Question

Quizplus · Accepted Answer

The total amount of service department costs allocated to producing departments remains the same under both the step method and the direct method. The difference lies in how the costs are allocated, not in the total amount allocated.

What Will Be the Difference in the Total Service Department