Which of the following statements regarding the allocation of cost from other departments to the multiple operating departments of a large firm is/are true? 1. When allocating costs of departments such as Marketing and Logistics to the operating departments of the firm, the direct method should always be used (instead of the reciprocal or step- down method). 2. When allocating costs of departments such as Legal, Information Technology and Human Resources to the operating departments of the firm, the reciprocal method should always be used (instead of the direct or step-down method). 3. The allocation of support department costs to operating departments occurs in large manufacturing firms but not in large firms that provide services. Statement 1 only Statement 2 only O Statement 3 only Statement 1 and 2 only O Statement 1 and 3 only

Which of the following statements regarding the allocation of cost from other departments to the multiple operating departments of a large firm is/are true? 1. When allocating costs of departments such as Marketing and Logistics to the operating departments of the firm, the direct method should always be used (instead of the reciprocal or step- down method). 2. When allocating costs of departments such as Legal, Information Technology and Human Resources to the operating departments of the firm, the reciprocal method should always be used (instead of the direct or step-down method). 3. The allocation of support department costs to operating departments occurs in large manufacturing firms but not in large firms that provide services. Statement 1 only Statement 2 only O Statement 3 only Statement 1 and 2 only O Statement 1 and 3 only

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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i.3
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