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Unformatted text preview: ervice centers. Because it allocates service centers to other service centers as well as production centers, the stepdown method is more complicated than the direct method, but it’s also more precise in that it includes the cost effects associated with one service center’s use of another service center. However, once a service center’s costs have been allocated, it cannot receive an allocation; thus, for a given service center, the stepdown method includes only the cost effects of its use of the service centers that precede it in the sequence, and not those that follow it. The Reciprocal Method. The reciprocal method is the most complex technique; in it, all service centers both make and receive allocations to and from each other. The allocation amounts are determined by a set of simultaneous equations, which usually are solved on a computer. Because all service centers can both make and receive allocations, the reciprocal method is the most accurate of the three. An example of the rec...
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This document was uploaded on 03/30/2014.

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