Three different service department methods (direct, step-down, and reciprocal)
Employing cost allocation techniques frequently facilitates decision-making in businesses. In order to ascertain whether present techniques accurately reflect the underlying worth and profitability of the businesses, Anthony’s Orchards is monitoring its performance and assessing its service department cost allocation procedures. Explain in a 1- to 2-page memo to the accounting manager why you think a specific cost allocation technique should be used.
Use information from Anthony’s Orchards website to calculate the three various service department methods (direct, step-down, and reciprocal), compare the methods, and organize your findings for your memo. Pick one approach and explain why Anthony’s Orchards should use it.
Your memo should discuss how the information offered this week, together with anything from previous weeks and any Required and/or Optional Resources, was applied.
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The memo should contain a description of your recommendation, a justification for why it is crucial, and a discussion of the results of disregarding the proposal.