3 Ways to Allocate Costs to Multiple Support Departments (Direct, Step-down, and Reciprocal methods)

This video discusses three different ways to allocate the costs of multiple support departments when the support departments provide services to each other. The key question is how to treat the costs of services that the support departments provide to each other. The Direct Method does not allocate any of these costs, the Step-down Method allocates some of these costs, and the Reciprocal Method allocates all of these costs.
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