The Direct Method for Allocating the Costs of Multiple Support Departments

This video shows how to use the Direct Method to allocate the costs of multiple support departments to operating divisions when the support departments provide services to each other. When using the Direct Method, you simply ignore the services that the support departments provide to one another. The Direct Method is popular because it is the easiest method to apply but it ignores the services that support departments provide to one another. The Step Down Method and Reciprocal Method address this issue by allocating support costs provided between support departments.

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