(Appendix 4B)What Allocation Method Recognizes That Service Departments Often Provide

question 84

Multiple Choice

(Appendix 4B) What allocation method recognizes that service departments often provide each other with interdepartmental services,and it is therefore considered to be the most accurate method for allocating service department costs to operating departments?

• A) The direct method.
• B) The step-down method.
• C) The reciprocal method.
• D) The allocation by cost behaviour method.

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Definitions:

Lead Indicators

Metrics that are used to predict future performance or trends before they can be measured by lagging indicators.

Cause And Effect

A relationship in which one event (the cause) makes another event happen (the effect).

Drive Outcomes

Strategies or actions implemented to directly influence and achieve specific goals or results in an organization.

Shop Floor Level

The area in a manufacturing facility where workers directly engage in production activities.