Cost And Management Accountıng Deneme Sınavı Sorusu #1402515
Which of the following methods allocates each support department’s costs directly to the operating departments?
Reciprocal cost-allocation method |
Direct cost-allocation method |
Dual-rate cost-allocation method |
Single-rate cost allocation method |
Step-down cost-allocation method |
The direct allocation method (often called the direct method) is the most widely used method of allocating support department costs. This method allocates each support department’s costs directly to the operating departments. In this method costs accumulated in service departments are allocated to the manufacturing departments depending on the services that each of the manufacturing department requires from each of the service department. In this method, firstly, we have to identify the service carried out by each of the service department. The correct answer is B.
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