When the Step-Down Method Is Used, the Service Department Whose

question 15

Multiple Choice

When the step-down method is used, the service department whose costs are allocated first is often the department that:

• A) obtains the highest yield.
• B) has the lowest cost.
• C) is the newest.
• D) serves the greatest number of other service departments.
• E) serves the fewest other service departments.

---

Definitions:

Complements

Goods or services that are used together, where an increase in demand for one leads to an increase in demand for the other.

MRC

Marginal Revenue Cost, an economics term referring to the cost added by producing one additional unit of a product or service.

Technological Innovations

The introduction of new technologies or methods that improve products, processes, or services, often contributing to increased efficiency or value.

Labor Market

The supply and demand for labor, where employers seek to hire workers and workers look for employment.