The Support Department Cost Allocation Method That Fully Accounts for the Mutual

question 76

Multiple Choice

The support department cost allocation method that fully accounts for the mutual provision of services between support departments is called the:

• A) direct method.
• B) step-down method.
• C) reciprocal method.
• D) dual cost allocation method.

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Definitions:

Sunk Costs

Expenses that have already been incurred and cannot be recovered, which should not affect future decision-making but often do.

External Review

An evaluation or assessment conducted by individuals or entities outside of an organization to ensure objectivity and impartiality, often focusing on processes, products, or financial health.

Framing Bias

A cognitive bias where people react differently to a particular choice depending on how it is presented, such as a loss or gain.

Risk-Averse

A tendency to avoid taking risks, preferring safer or more predictable outcomes over uncertainty.