Final answer:
The step-down allocation method is used to allocate costs associated with overhead costs that will be distributed to overhead departments that provide services to each other.
The correct answer is b. step-down allocation.
Step-by-step explanation:
The simultaneous equations method allocates costs associated with overhead that will be distributed to some overhead departments that provide services to each other. This method involves setting up simultaneous equations based on the services rendered between departments, and solving them to determine the allocation of overhead costs. Unlike the direct method or the step-down allocation method, which allocate overhead costs in a one-way direction and do not fully accommodate the reciprocal nature of services provided between overhead departments, the simultaneous equations method accounts for this interdepartmental support comprehensively. The double distribution method is not a commonly recognized term within managerial accounting and cost allocation.
For instance, if there are two departments, A and B, providing services to each other, the simultaneous equations could represent the total costs of each department as a function of both their own direct costs and the services they received from the other department. The equations would then be solved to find an equitable distribution of the total costs between the departments.