Step-down method
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The step-down method allocates more costs to the producing departments than does the direct method.
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Solution Summary
The solution discusses the step down method and direct method in relation to cost allocation.
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The statement is not correct.
Both methods allocate the same amount of cost to the producing departments, only the way the costs are allocated differs.
The basic purpose is to allocate the cost of service departments to the producing departments. Since the service department costs do not change with the ...
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