What process is used to allocate support department costs? How is the direct method used to allocate support costs to operating departments?

Measuring and Assigning Support Department Costs

What are support departments, and why are their costs allocated to other departments?

• Q2: What process is used to allocate support department costs?
• Q3: How is the direct method used to allocate support costs to operating departments?

• Q4: How is the step-down method used to allocate support costs to operating departments?

• Q5: How is the reciprocal method used to allocate support costs to operating departments?

• Q6: What is the difference between single- and dual-rate allocations?

• Q7: How do support cost allocations affect decisions and managerial incentives?