US CMA Part 1 · Chapter 4 · Question 16 of 22
Which support department cost allocation method fully recognizes services that support departments provide to each other in both directions?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The reciprocal method
Explanation
The reciprocal method uses simultaneous equations so that every support department's services to every other support department are reflected. The direct method ignores all inter-support services, and the step-down method recognizes them only in one direction.
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