Managerial accounting test 2 Verified Exam Questions and Answers
Latest update 2026/2027
Question:
What is a support or service department?
Answer:
Departments that provide service to production departments or other service departments.
Question:
What is an operating or production department?
Answer:
Departments that directly add value to a product or service.
Question:
In service department costing, what is a user departments?
Answer:
A department that uses the functions of service departments. User departments can be production
departments or service departments.
Question:
What are 3 methods of allocating service department costs when there are multiple service
departments?
Answer:
1) direct method
Question:
2) step-down method
3) reciprocal method
What is the primary difference between the three methods?
Answer:
The degree to which mutual support to other service departments is recognized.
Question:
Describe the direct method.
Answer:
The direct method recognizes no mutual support between service departments and so only allocates
service department cost to operating departments, never to other service departments.
, Question:
How much mutual support is recognized in the direct method?
Answer:
None. This means that no service cost will be allocated to other service departments.
Question:
Describe the step-down method.
Answer:
The step-down method partially recognizes mutual support based on the relative amount of support
provided between support departments.
Question:
How is mutual support ranked in the step-down method?
Answer:
Ranking can be done two common ways
Question:
1. Based on the percent of support provided to other service departments.
2.Based on the size of the cost pool.
3. Based on the cost, in dollars, of support provided to other service departments.
Describe the reciprocal method.
Answer:
The reciprocal fully recognizes mutual service support.
Question:
Which method is generally most and least accurate?
Answer:
Generally most accurate - reciprocal - because it all recognizes mutual service support generally least
accurate - direct - because it ignores all mutual service support
Question:
What must be true if you believe that the direct method is reasonably accurate?
Answer:
Service departments provide very little support to other service departments.
Question:
What must be true is you believe that the step-down method is reasonably accurate?
Answer:
Service department support is generally one-sided.
Latest update 2026/2027
Question:
What is a support or service department?
Answer:
Departments that provide service to production departments or other service departments.
Question:
What is an operating or production department?
Answer:
Departments that directly add value to a product or service.
Question:
In service department costing, what is a user departments?
Answer:
A department that uses the functions of service departments. User departments can be production
departments or service departments.
Question:
What are 3 methods of allocating service department costs when there are multiple service
departments?
Answer:
1) direct method
Question:
2) step-down method
3) reciprocal method
What is the primary difference between the three methods?
Answer:
The degree to which mutual support to other service departments is recognized.
Question:
Describe the direct method.
Answer:
The direct method recognizes no mutual support between service departments and so only allocates
service department cost to operating departments, never to other service departments.
, Question:
How much mutual support is recognized in the direct method?
Answer:
None. This means that no service cost will be allocated to other service departments.
Question:
Describe the step-down method.
Answer:
The step-down method partially recognizes mutual support based on the relative amount of support
provided between support departments.
Question:
How is mutual support ranked in the step-down method?
Answer:
Ranking can be done two common ways
Question:
1. Based on the percent of support provided to other service departments.
2.Based on the size of the cost pool.
3. Based on the cost, in dollars, of support provided to other service departments.
Describe the reciprocal method.
Answer:
The reciprocal fully recognizes mutual service support.
Question:
Which method is generally most and least accurate?
Answer:
Generally most accurate - reciprocal - because it all recognizes mutual service support generally least
accurate - direct - because it ignores all mutual service support
Question:
What must be true if you believe that the direct method is reasonably accurate?
Answer:
Service departments provide very little support to other service departments.
Question:
What must be true is you believe that the step-down method is reasonably accurate?
Answer:
Service department support is generally one-sided.
