Which of the following statements is true about the direct method of allocating support department costs to production departments?

A) The direct method is more difficult to use than the sequential method.
B) The direct method allocates only some of the support department costs directly to production departments and is more accurate than the reciprocal services method.
C) The direct method requires that the same cost driver be used for each support department.
D) The direct method allocates all support department costs directly to production departments thus ignoring the possibility that some support departments may also serve other support departments.

Question

Yahya Alshehri · Accepted Answer

Final Answer : D, Explanation :  The direct method allocates all support department costs directly to production departments, ignoring any services that support departments may provide to each other, which makes it simpler but potentially less accurate compared to methods that account for such interactions (like the reciprocal method).

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