Which service department cost allocation method assigns indirect costs to cost objects after considering interrelationships of the cost objects?
$\text {\underline{Algebraic method. } }$ $\text {\underline{ Step method} }$
A)no no
B)no yes
C)yes yes
D)yes no

Question

Which service department cost allocation method assigns indirect costs to cost objects after considering interrelationships of the cost objects?
$\text {\underline{Algebraic method. } }$                               $\text {\underline{ Step method} }$
A)no no
B)no yes
C)yes yes
D)yes no

Quizplus · Accepted Answer

The algebraic method and the step method both consider the interrelationships of cost objects when assigning indirect costs. The algebraic method does so through simultaneous equations, while the step method allocates costs sequentially from the service department providing the most services to other departments to the least.

Which Service Department Cost Allocation Method Assigns Indirect Costs to Cost