Asked by Faith DeNoyer on Jun 10, 2024
Verified
The sequential method of allocating support department costs to production using the ABC method is the easiest and most accurate.
Sequential Method
An approach to cost allocation in which support department costs are allocated to other support and operating departments sequentially, one after another, based on a predetermined order.
- Gain insight into the assorted methods used for the allocation of overhead and support department costs in the context of Activity-Based Costing.
- Discern the differences in complexity and accuracy among direct, sequential, and reciprocal methods for cost distribution.
Verified Answer
MZ
Melissa Z. DunnJun 16, 2024
Final Answer :
False
Explanation :
The sequential method, also known as the step-down method, is not associated with the ABC (Activity-Based Costing) method. ABC uses multiple cost drivers to allocate costs more accurately, while the sequential method simplifies allocation by processing departments in a specific order, which may not capture the complexity and accuracy that ABC aims for.
Learning Objectives
- Gain insight into the assorted methods used for the allocation of overhead and support department costs in the context of Activity-Based Costing.
- Discern the differences in complexity and accuracy among direct, sequential, and reciprocal methods for cost distribution.