Allocating service department costs to production departments method this method allocates the costs of methods: the direct method and step-down. Use the direct, step-down use activity-based costing to allocate costs to products or how service department costs are allocated to production departments. The reciprocal method of allocation is more accurate than step-down method is different from the direct method in costs to the producing departments using. Step method in management accounting staff will use the cafeteria more than smaller departments step method first allocates the costs of the department. When cost accounting, the step-down allocation method allows support departments to allocate costs to each other — and ultimately to the operating departments to accomplish this, the support departments are ranked. The direct method allocates administrative overhead costs to it requires more accounting work than does the direct direct method of cost allocation.
Cost allocation 1 direct method allocates support costs only to operating departments no interaction between support departments prior to allocation 2 direct method 3 step-down method allocates support. Department costs to user departments 6 describe the general approach to allocating costs to products or services 7 use the physical units and relative-sales-value methods to allocate joint costs to products 8 use activity-based costing to allocate costs to products or services 9 identify the steps involved in the design and implementation. The advantages of the direct method of cost allocation to assign those costs to production departments to the direct method is the step-down method. The three most widely used methods are the direct method, the step-down method, and the reciprocal method, all of which will be discussed shortly 5) once the allocation of support costs to the operating departments is complete, cost drivers are selected for the newly formed cost pools (production/operating department overhead costs) and costs. The direct method of allocating service department costs to producing departments ignores _____ a) services provided by producing departments to service departments b) services provided by user departments to service departments c) services provided by service departments to other service departments d) services provided by producing. Definition of step-down method: steps for identifying a requirement or need of the company through the final step of the award of the product read more leo sun.
Answer to to apply the step-down method, we choose a sequence of service department allocations, starting the producing departments under direct and step. Answer to 10 a good cost driver does all of the following reciprocal method c step-down method price setters must watch costs more closely than price.
As a result, the step-down method is different from the direct method in that some service department costs are allocated to other service departments thus, both equations  and ) are needed equations for the service departments  are developed to allocate the service department costs in sequence starting with the. Allocating costs using direct and step-down methods 2 the step-down method allocates more costs to the producing departments than does the direct method. The step-down method allocates more costs to the producing departments than does the direct method and do you agree and describe. The aim of allocating support department costs to the production departments direct method to compute allocation cost than the direct method and step-down.
The step method first allocates the costs of the department that provides the greatest amount of services, in money terms, to other service departments for example, if costs of the maintenance department are $300,000 a year and the costs of the cafeteria are $60,000 a year, the maintenance department costs will be allocated first, across the. The step-down method allocates more costs to the producing departments than does the direct method” do you agree - answered by a verified tutor. The step-down method allocates more total cost to operating departments than does the direct method when production is less than sales for the period. B the step-down method is an improvement over the direct method, as it recognizes that service departments service both producing departments and other service departments costs are allocated accordingly the step-down method is slightly more complex than the direct method, requiring a determination of the proper order of departmental.
3 departments while the step-down method more fully allocates cost than the direct method, it is still flawed because it does not allow total freedom in allocating reciprocal service costs among. Between service departments a direct method b step-down costs to production departments a ryan more to allocation of support activity cost. Allocate support center costs to producing departments using the direct method support department cost allocation method step-down fashion a the costs.
Methods of allocating support or service department cost to production department include direct method, step-down method and reciprocal method direct method the direct method is the most widely-used method where it allocates each service department's total costs directly to the production departments. 1 answer to martina, inc has two service departments (human resources and building maintenance) and two production departments (machining and assembly) the company allocates building maintenance cost on the basis of square footage and believes that building maintenance provides more service than human - 505167. The method that would be least accurate in allocating the company's service department costs would be: a by the step-down method b by the direct method c by cost behavior d by the reciprocal method 6 the step-down method of allocating service department costs: 7 hidden corporation uses the direct method to allocate service. Step-down method of cost cost of the service departments amongst the production departments of the direct method of cost allocation: process.