Question

Which is know as step method

Answer 1

Answer:

also known as step down method

Step-by-step explanation:

Unlike direct method, the step method (also known as step down method) allocates the cost of a service department to other service departments as well as to operating departments. The cost allocation under step method is a sequential process.

Answer 2

The step method is also known as step down method.

• The step method also known as the step-down method allocates the cost of a service department to other service departments as well as to operating departments, unlike the direct method.
• The cost allocation under the step method is a sequential process.
• It begins with the allocation of the cost of the service department that provides the greatest amount of service to other service departments.
• It ends with the allocation of the cost of the service department that provides the least amount of service to other service departments.
• The direct method is considered the most simple method of allocating the cost of service departments to operating departments.
• Under this method, the costs are incurred by service departments which are not allocated to each other; rather, they are directly allocated to the operating departments using some appropriate allocation base.

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