This document discusses methods for allocating the costs of support departments to operating departments. It outlines the step-down allocation method, which sequentially allocates support department costs to other support departments and operating departments, recognizing the mutual services provided among support departments. This method first allocates costs to other support departments, then to operating departments, ensuring all support department costs are eventually distributed.
This document discusses methods for allocating the costs of support departments to operating departments. It outlines the step-down allocation method, which sequentially allocates support department costs to other support departments and operating departments, recognizing the mutual services provided among support departments. This method first allocates costs to other support departments, then to operating departments, ensuring all support department costs are eventually distributed.
This document discusses methods for allocating the costs of support departments to operating departments. It outlines the step-down allocation method, which sequentially allocates support department costs to other support departments and operating departments, recognizing the mutual services provided among support departments. This method first allocates costs to other support departments, then to operating departments, ensuring all support department costs are eventually distributed.
Allocating Costs of a Support Department to Operating Departments
Support (service) departmentprovides the
services that assist other internal departments in the company Operating (production) departmentdirectly adds value to a product or service Step-Down Method Also called the sequential allocation method Allocates support-department costs to other support departments and to operating departments in a sequential manner Partially recognizes the mutual services provided among all support departments Step-Down Allocation Method Illustrated Step-Down Allocation Method Illustrated