When the Step-Down Method Is Used to Allocate Support Department

question 33

Multiple Choice

When the step-down method is used to allocate support department costs, a common way to select the first support department in the sequence is to choose the support department which:

• A) obtains the highest yield.
• B) serves no other support department.
• C) serves the greatest number of other support departments.
• D) obtains the highest yield AND serves no other support department.

---

Definitions:

Oligopoly

A market structure characterized by a small number of firms that have significant market power, leading to limited competition.

Price Fixing

An illegal practice where businesses collude to set prices at a certain level, rather than allowing market forces to determine them.

Microsoft

A multinational corporation that specializes in the development, manufacturing, licensing, support, and sales of computer software, consumer electronics, and personal computers and services.

Antitrust Policy

Regulations and laws that encourage competition by limiting monopolies, preventing mergers that would restrict competition, and other business practices that would reduce consumer welfare.