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?
