Which Statement Concerning the Step-Down Method of Allocating Support Department

question 17

Multiple Choice

Which statement concerning the step-down method of allocating support department costs is not correct?

• A) The method allocates costs one department at a time
• B) The cost object in the allocation exercise is the support departments and the operating departments
• C) The method recognises that support departments provide support for other support departments
• D) The allocation process begins with the support department that provides the least service to the other support departments

Recognize the methods and tools for measuring runout.

Identify errors caused by improper application of runout tolerances.

Differentiate between circular runout and total runout.

Explain the significance of datum features in runout measurement.

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Definitions:

Merchandise Inventory

The total value of a retailer's or wholesaler's goods on hand at the end of an accounting period, available for sale to customers.

Accounts Payable

Money owed by a company to its suppliers or creditors for goods and services received but not yet paid for.

Indirect Method

A method used in cash flow statements to convert net income into net cash flow from operating activities by adjusting for non-cash transactions and changes in working capital.

Depreciation Expense

The allocated portion of the cost of a fixed asset, written off as an expense over its useful life to reflect its wear and tear or obsolescence.