Consider the Following Statements About the Step-Down Method of Service

question 76

Multiple Choice

Consider the following statements about the step-down method of service department cost allocation:
I. Under the step-down method, all service department costs are eventually allocated to production departments.
II. The order in which service department costs are allocated is important.
III. After a service department's costs have been allocated to other departments, no costs are re-circulated back to that service department.
Which of the above statements is (are) correct?

• A) I only.
• B) II only.
• C) I and II.
• D) I and III.
• E) I, II, and III.

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Definitions:

Hang Up

The act of ending a telephone call, often abruptly.

Sell Them

A directive to persuade individuals to purchase a product or service.

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The process of acquiring new business leads or customers through recommendations from existing customers or contacts.

Continuous Process

An ongoing operation that runs 24/7 without interruption, often seen in manufacturing.