Cost Accounting notes
Step-down method (sequential allocation method) allocates support-dept costs to
other support departments and to operating departments in a sequential manner that partially recognizes the mutual service provided among all support depts. This method
requires support depts to be ranked. Reciprocal method allocates support-dept costs to operating depts by fully recognizing the mutual services provided among all support
depts. 1) PM = 6300000+0.1IS; IS = 1452150+0.2PM; to get the number of complete reciprocated costs of PM and IS. 2) allocate the complete reciprocated cost of each
support dept to all other depts (support and operating) on the basis of the usage %.
Common cost is a cost of operating a facility, activity, or like cost object that is shared by two or more users. Stand-alone cost-allocation method determines the weights
for cost allocation by considering each user of the cost as a separate entity
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