Question

When comparing the results of using the direct, sequential, and reciprocal services methods of allocating support department costs to production departments, which of the following statements is true for a manufacturing company that has a total of $1,500,000 in support costs to allocate?
a.The reciprocal services method allocates more than $1,500,000 to the production departments.
b.The reciprocal services method can be viewed as a compromise on accuracy and difficulty in allocating the $1,500,000 because it considers some, though not all, inter-support-department services and is easier to compute than the direct method.
c.The direct method yields the most accurate allocation of the $1,500,000.
d.The sequential method can be viewed as a compromise on accuracy and difficulty in allocating the $1,500,000 because it considers some, though not all, inter-support-department services and is easier to compute than the reciprocal services method.

Answer 1

Answer: d. The sequential method can be viewed as a compromise on accuracy and difficulty in allocating the $1,500,000 because it considers some, though not all, inter-support-department services and is easier to compute than the reciprocal services method

Explanation:

For a a manufacturing company that has a total of $1,500,000 in support costs to allocate, it should be noted that the sequential method can be viewed as a compromise on accuracy and difficulty in allocating the $1,500,000 because it considers some, though not all, inter-support-department services and is easier to compute than the reciprocal services method