The reciprocal allocation methoda.is the most widely used because of its simplicityb.requires the ranking of support departments inthe order that the allocation is to proceedc. fully incorporates interdepartmentalrelationships into the support-department costallocationsd.allocates support-department costs to othersupport departments and to operatingdepartments in a sequential manner thatpartially recognizes the mutual services providedamong all support departmentse.None of the answers.

The reciprocal technique allocates expenditures incurred y service departments to other departments…

Answered: The reciprocal allocation method a.is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following is referred to as the second stage of cost allocation? O The allocation of operating department costs to goods or services produced O The allocation of direct department costs to indirect departments O The allocation of service department costs to production departments O The allocation of support department costs to goods or services produced • Previous
Q.1 Compare your cost allocations from the direct and reciprocal methods. omment on how similar or different they are, and make a recommendation to FMU leadership as to which it should use for allocating these costs. Q.2 Should FMU consider using the reciprocal method for allocating some of the support service costs while using the direct method for others? Explain. If it did, which support services would you recommend for the reciprocal method? Explain why.
18. Which of the following cost allocation methods does not take into consideration that service centers provide services to each other? a. two-step method b. reciprocal method c. step method d. direct method
Distinguish among the three methods of allocating the costs of support departments to operating departments. The ignores any services rendered by one support department to another; it allocates each support department's costs directly to the operating departments. The a sequential manner that partially recognizes the mutual services provided among all support departments. allocates support-department costs to other support departments and to operating departments in The allocates support-department costs to operating departments by fully recognizing the mutual services provided among all support departments.
Indirect expenses a. Cannot be readily traced to one department. b. Are allocated to departments based on the relative benefit each department receives. c. Are the same as uncontrollable expenses. d. a, b, and c above are all true. e. a and b above are true.
Determining the basis used to allocate support department costs follows which guideline? O Profit maximization O Revenue generation O Goal comparison O Cause and effect
true or false Costs that are traceable to a segment and are completely beyond the influence of the segment manager can be advantageously divided in segment reports into two distinct responsibilities - those for segments and those for segment managers.
The support department allocation method that is the most widely used because of its simplicity is the: a. reciprocal allocation method b. sequential allocation method c. step-down method d. direct allocation method
Which of the following statements about responsibility accounting are correct? Select one: a. Responsibility accounting systems differ widely across organizations. b. The structure for accumulating cost information generally mirrors the structure for accumulating responsibility center information. c. Responsibility accounting is the primary responsibility of accounting staff.
Explain the meaning of the undernoted measures that may be used for divisional performance measurement and investment decision-making. Discuss the advantages and problems associated with: Residual income
What are support departments, and why are their costs allocated to other departments? What process is used to allocate support department costs?
TRUE OR FALSE Activity center is a unit in an organization for which management wants the costs of a set of activities be reported separately.

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