The Allocation Order of Support Department Costs Does Not Matter

question 83

True/False

The allocation order of support department costs does not matter if the step down method of allocation is used

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that change in proportion to the level of production or business activity.

Variable Overhead

Variable overhead refers to costs that fluctuate with production levels, such as utilities and raw materials, unlike fixed overhead costs which remain constant regardless of production volume.

Fixed Overhead

Regular, consistent expenses not directly tied to production levels, such as rent, salaries, and insurance.