Which of the Following Is a Weakness of the Step

question 15

Multiple Choice

Which of the following is a weakness of the step method of service cost allocations?

• A) Computations are more complex than the reciprocal method.
• B) All interdepartmental services are ignored.
• C) All intradepartmental services are ignored.
• D) The order of service department allocation has to be determined.

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Definitions:

Management Accounting

The process of preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions.

Activity-Based Costing

A costing methodology that assigns overhead and indirect costs to specific activities, leading to more accurate product or service costing.

Mass Service

A service concept characterized by high service volume and process standardization, catering to a large market with minimal customization.

Hybrid Costing

A costing system that combines elements of both job costing and process costing, applicable in manufacturing environments producing similar products in batches.