Asked by Kimberly Beltran on Jun 09, 2024
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The step-down method of service department cost allocation ignores interdepartmental services provided from one service department to another service department and allocates all service department costs directly to operating departments.
Step-Down Method
An indirect method of cost allocation that allocates costs of service departments to producing departments in a sequential manner.
Service Department Cost Allocation
The process of assigning indirect costs from service departments (like maintenance or HR) to producing departments based on their usage of services.
- Analyze the differences and applications of the direct and step-down methods of service department cost allocation.
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Learning Objectives
- Analyze the differences and applications of the direct and step-down methods of service department cost allocation.
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