Under the Step-Down Method of Allocation

question 103

Multiple Choice

Under the step-down method of allocation:

• A) The costs for the support department with the smallest total are allocated first
• B) When the second support department's costs are allocated, they are allocated to each of the other departments, but not to the first support department that was allocated.
• C) Once a support department's costs have been allocated, it is available for an additional allocation
• D) Support department costs are allocated solely to operating departments

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Definitions:

Circular-Flow Diagram

A visual model of the economy that illustrates the exchanges between households and firms through markets for products and resources.

Economy

A system of production, distribution, and consumption of goods and services in a particular geographic region.

Production Possibilities

A graphical representation showing the maximum quantity of goods and services that an economy can produce when all resources are used efficiently.

Circular-Flow Diagram

A visual model of the economy that shows how dollars flow through markets among households and firms.