The Method That Allocates Costs by Explicitly Including All the Services

question 11

Multiple Choice

The method that allocates costs by explicitly including all the services rendered among all support departments is the ________.

• A) direct method
• B) step-down method
• C) reciprocal method
• D) sequential method

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Definitions:

Consumption

The usage of resources or products for the purpose of satisfying human needs or wants.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Income

The monetary payment received for one's work, investments, or other sources, primarily used for personal consumption, savings, and investment.

Present Value

The present value of an expected amount of money or sequence of cash flows, with a given return rate.