Many organizations have departments that provide services to other departments. For example, a janitorial department delivers services to the rest of a company, including the production departments and the other service departments. Accountants can choose from three different methods to allocate the costs of service departments to other departments. The sequential, or step-down, method is intermediate between the easy-to-use direct method and the complex reciprocal method. Service Cost Allocation
Sequential Method
Sequential vs. Direct
Sequential vs. Reciprocal
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