In the Step-Down Method,the First Service Department Used in the Sequence

question 26

Multiple Choice

In the step-down method,the first service department used in the sequence to allocate service department costs is the department that renders the ________.

• A) greatest service as measured by physical capacity
• B) greatest service as measured by total employees
• C) greatest service as measured by costs to the other service departments
• D) greatest service as measured by costs to the producing departments

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Definitions:

Inventory

Goods and materials that a business holds for the ultimate goal of resale, production, or utilization in manufacturing.

Receivable Turnover

A financial metric indicating how efficiently a company collects revenue from its credit customers by measuring the number of times average accounts receivable are collected during a period.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Tax Rate

The percentage of income or value of a good, service, or asset collected by the government as tax.