Which of the following statements explains the major difference between the sequential method and the direct method?

A) Under the sequential method, the total support department costs to be allocated will also include any costs that were allocated to that support department from other support departments.
B) Under the direct method, the total support department costs to be allocated will also include any costs that were allocated to that support department from other support departments.
C) Under the sequential method, the total support department costs to be allocated will never include any costs that were allocated to that support department from other support departments.
D) Under the sequential method, every support department receives costs allocated from every other support department.

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Taylor Dombalis · Accepted Answer

Final Answer : A, Explanation :  The sequential method allocates support department costs to other support departments and to operating departments in a sequence, and includes costs allocated from other support departments in the total costs to be allocated. This is a key difference from the direct method, which allocates support department costs only directly to operating departments, without considering interdepartmental support department allocations.

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