Which of the following describes who the direct allocation method allocates support-department costs?
A) it allocates support-department costs to operating departments by fully recognizing the mutual services provided among all support departments
B) it allocates support-department costs to other support departments and to operating departments in a sequential manner that partially recognizes the mutual services provided among all support departments
C) it allocates each support-department's costs to operating departments only
D) it requires managers to rank the support departments in the order that the step-down allocation is to proceed

Question

Quizplus · Accepted Answer

The direct allocation method only allocates each support-department's costs to operating departments without considering the mutual services provided among support departments. Therefore, option C is the correct answer. Option A describes the reciprocal allocation method, while option B describes the step-down allocation method. Option D describes the step-down allocation method with ranking of support departments.

Which of the Following Describes Who the Direct Allocation Method