Step method in cost accounting is followed with regard to what
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The answer is allocation of department costs.
Step method in cost accounting is followed with regard to allocation of department costs. In this case, some service departments offer their services to some other service departments. This is followed by cost allocation to these departments. The service department that has the maximum costs percentage is the first to allocate costs to other service departments.
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Solution :-
Step Method -
This method allocates service costs to the operating departments and other service departments in a sequential process. The sequence of allocation generally starts with the service department that has incurred greatest costs. After this department's costs have been allocated, the service department with the next highest costs has its costs allocated, and so forth until the service department with the lowest costs has had its costs allocated. Costs are not allocated back to a department that has already had all of its costs allocated.
Step Method -
This method allocates service costs to the operating departments and other service departments in a sequential process. The sequence of allocation generally starts with the service department that has incurred greatest costs. After this department's costs have been allocated, the service department with the next highest costs has its costs allocated, and so forth until the service department with the lowest costs has had its costs allocated. Costs are not allocated back to a department that has already had all of its costs allocated.
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