Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 The direct method ignores any services to other support departments. The step-down method partially recognises support to other service departments. The information systems support group (with total budget of €2,400,000) provides 10% of its services to the A/HR group. The A/HR support group (with total budget of €600,000) provides
25% of its services to the information systems support group.
3 Three criteria that could determine the sequence
in the step-down method are a Allocate service departments on a ranking of the % of their total services provided to other service departments.
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