Department Costs, Common Costs and Revenues
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- Department Costs, Common Costs and Revenuesaccounting-mcqs › cost-accounting-mcqs › department-costs-common-costs-and-revenues
- Published
- 9 May 2023
- Last updated
- 28 May 2026
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What is the name of the technique that distributes the expenses of support departments to both operating and other support departments?
Multiple choice question for Department Costs, Common Costs and Revenues. Select an option, then review the explanation below.
Explanation
Option A refers to the indirect method, which does not allocate costs to other support departments. Option B, the direct method, allocates costs only to operating departments. Option C, the step-down method, allocates support department costs sequentially to both operating and other support departments. Option D, the reciprocal method, fully recognizes mutual services between support departments.
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Practice related questions from the same subject.
- 1.Which of the following approaches are used to assign costs among reciprocal support departments?
- 2.In the incremental cost allocation approach, what is the term for the cost object user that holds the second position in the ranking sequence?
- 3.Which cost allocation technique assigns support department expenses to operating departments by accounting for all mutual services exchanged among support departments?
- 4.In the incremental approach, the party assigned the highest priority in distributing shared costs is known as the ____________?
- 5.If Division A's employees work 8,000 hours at a rate of $90 per hour, what hourly rate should Division B be charged under the single rate method?