The method, which allocates the cost of support department, to operating and support departments is known as ___________?
Correct answer: D. step down method
- A. indirect method
- B. direct method
- C. reciprocal method
- D. step down method
Explanation
The step-down method allocates a support department's cost to operating departments and may also allocate it to other support departments. Unlike the direct method, it recognizes some inter-support-department services.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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