Unformatted text preview: are allocated to production centers only and not to other service centers. This is the simplest method of the
three, and is used by many companies. It is the least precise of the three, however, in that it does not include the
cost effects associated with one service center’s use of another service center.
The Stepdown Method. The stepdown method sequentially “trickles down” service center costs into both
other service centers and production centers. This stepping-down process begins with the first service center in the
David W. Young • Management Accounting for Managers • Chapter 1
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sequence, and spreads its costs over both the remaining service centers as well as the production centers. The distribution is based on each receiving center's use of the service center’s services as determined by the chosen allocation basis. This process is followed for all remaining s...
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This document was uploaded on 03/30/2014.
- Spring '14