Asked by elizabeth odegard on Jul 13, 2024
Verified
The direct, sequential, and reciprocal services methods of allocating support department costs to production departments using ABC require a three-step process.
Reciprocal Services
Services exchanged between departments within an organization or between businesses without involving monetary payment, aiming for mutual benefit.
Sequential
Occurring in a logical order or sequence, often referring to processes or steps that follow one after another.
Direct
Pertaining to costs or expenses that can be specifically traced to a cost object, such as a product, department, or project.
- Comprehend the various techniques for distributing overhead and support department expenses in Activity-Based Costing (ABC).
Verified Answer
JL
Jacob LiangJul 14, 2024
Final Answer :
False
Explanation :
The direct, sequential, and reciprocal methods are traditional cost allocation methods, not specifically tied to Activity-Based Costing (ABC). ABC typically involves identifying activities, assigning costs to those activities, and then allocating those costs to products or services based on their consumption of activities, which does not directly correspond to the three-step process of the traditional methods mentioned.
Learning Objectives
- Comprehend the various techniques for distributing overhead and support department expenses in Activity-Based Costing (ABC).