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Which of the following statements regarding the allocation of cost from other departments to the...

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Accounting

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Which of the following statements regarding the allocation of cost from other departments to the operating department(s) is/are likely to be true? 1. For a firm that only has a single department (Department X) that provides services to its multiple operating departments, the choice between direct vs step down vs reciprocal method is relevant when deciding how to allocate Department X's cost to the operating departments. 2. For a firm that only has a single operating department but multiple support departments, the choice of which method to use (i.e., direct vs step down vs reciprocal) to allocate the support departments' cost to the operating department will impact the accuracy of the cost allocation. 3. Support department costs are more likely to be indirect costs (and less likely to be direct costs) of the individual units of output produced by the operating departments. Statement 1 only Statement 2 only Statement 3 only Statements 1 and 3 only Statements 2 and 3 only

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