The Support Department Cost Allocation Method That Completely Ignores Reciprocal

question 60

Multiple Choice

The support department cost allocation method that completely ignores reciprocal services between support departments is called the:

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

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Definitions:

Standard Cost Systems

An accounting method that uses standard costs for direct materials, labor, and overhead to help managers control business costs.

Performance Evaluation

The formal assessment process of an employee's job performance, typically conducted through reviews and meetings.

Actual Costing System

A costing method that assigns costs to products based on the actual costs of direct materials, direct labor, and overhead incurred.

Direct Material Price Variance

Direct material price variance measures the difference between the actual cost of direct materials and the expected (or standard) cost, indicating how well a company manages its material costs.