Question

Cost Accounting

short answer

The methods used for allocating support department costs include_________

Answer 1

The methods used for allocating support department costs include 1) Direct Method 2) Step Method and 3) Reciprocal Method.

The direct method allocates costs of each of the service departments to each operating department based on each department’s

share of the allocation base.

The Step method allocates service costs to the operating departments and other service departments in a sequential process.

The sequence of allocation generally starts with the service department that has incurred the greatest costs.Costs are

not allocated back to a department that has already had all of its costs allocated.

The reciprocal method allocates services department costs to operating departments and other service departments.