Asked by Lauren Danner on May 03, 2024
Verified
Under the reciprocal method of allocating support department costs to production departments using ABC, any inter-support-department usages are ignored.
Reciprocal Method
An accounting technique used in managerial accounting to allocate costs between support departments, taking into account the mutual services they provide to each other.
- Learn about the different processes for the distribution of overhead and support department charges in the framework of Activity-Based Costing.
- Recognize the complexity and accuracy differences between direct, sequential, and reciprocal methods in cost allocation.
Verified Answer
MB
Mohamed BezzineMay 06, 2024
Final Answer :
False
Explanation :
The reciprocal method of allocating support department costs specifically accounts for the mutual services provided among support departments, unlike methods that ignore inter-support-department usages.
Learning Objectives
- Learn about the different processes for the distribution of overhead and support department charges in the framework of Activity-Based Costing.
- Recognize the complexity and accuracy differences between direct, sequential, and reciprocal methods in cost allocation.