Question 1
Which of the following is one of the methods of allocating support department costs to operating departments that partially recognizes mutual service provided among all support departments?
◦ dual-cost allocation method
◦ direct method
◦ sequential allocation method
◦ single-rate cost allocation method
Question 2
Which of the following statements is false with regards to departmental cost allocations?
◦ amounts allocated to departments will most likely differ depending on the cost allocation method used
◦ the total amount allocated among departments will differ in total depending on the cost allocation method used
◦ the reciprocal method is usually the most conceptually precise method because it considers mutual services provided among all support departments
◦ the step-down and direct methods are simple for managers to compute and understand relative to the reciprocal method
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