Under the step-down method, once a service department's costs have been allocated to other departments, no costs should be reallocated back to the service department.

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Quizplus · Accepted Answer

This statement is true. The step-down method involves allocating service department costs to other departments in a sequential manner, starting with the service department that provides the most support to other departments. Once these costs have been allocated, they should not be allocated back to the service department. This is because the service department's costs have already been distributed to the other departments based on their usage of the service department's resources. Allocating costs back to the service department would result in double counting and distort the accuracy of the allocation.

Under the Step-Down Method, Once a Service Department's Costs Have