Question

Which is NOT true of the various methods of allocating service department costs?

a. The direct method is quick to compute, accurate, and has low information requirements
b. The choice of method affects the optimal allocation of resources
c. Application of the reciprocal method in a complex corporation usually requires the use of a computer
d. There are multiple sequence possibilities for the step-down method

Answer 1

The statement which is NOT true of the various methods of allocating service department costs is:

b. The choice of method affects the optimal allocation of resources

Step-by-step explanation:

The allocation method used by an organization does not affect whether the organization's resources are allocated optimally or not. After all, what is at stake is not the allocation of resources, but the allocation of consumed resources. An organization is free in making its choice of method. The basis for choosing an allocation method is to ensure that costs are allocated optimally and not resources.