When allocating costs using the step-down method (sequential), do we also consider the costs that have...
When allocating costs using the step-down method (sequential), do we also consider the costs that have incurred to the service departments themselves? For example, Does the cleaning department also considers its own cleaning costs? So basically the cleaning costs of the cleaning department.
Homework Answers
Step Down Method for allocating costs
- It is used where one service department render services to other service department.
- This method considers the services rendered by service department to another Service department
- Complicated method since it describes the sequence of distribution of cost.
- Service Department that serves largest number of services to other Departments Service & Production) is distributed FIRST on the basis of given %.
- After this next largest number of departments is apportioned.
- The process continues till the cost of last Service Dept is apportioned (allocate/divide up/distribute).
It means this method does not consider the costs that have incurred to the service department themselves.
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Please show full details step by steps
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please help me to solve this problem, Thanks!
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