(Appendix 4B)Which of the Following Statements About the Step-Down Method

question 83

Multiple Choice

(Appendix 4B) Which of the following statements about the step-down method of allocating service department is correct?

• A) It is a less accurate method of allocation than the direct method.
• B) It cannot be used when a company has more than two service departments.
• C) It is a simpler allocation than the direct method.
• D) It ignores some interdepartmental services.

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Definitions:

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns.

Manufacturing

The process of converting raw materials or components into finished goods through the use of tools, human labor, machinery, and chemical processing.

Retailing

The selling of goods or services directly to consumers, typically in small quantities.

Wholesaling

The business practice of selling goods in large quantities at lower prices to retailers or other entities, who then sell them to end consumers.