Methods for Allocating Costs Among Support Departments

The video tutorial explains cost allocation within organizations, focusing on support departments that do not generate external value. It covers three methods: the direct method, which allocates costs from support to operating units; the reciprocal method, which allows cost allocation between support departments; and the sequential or step down method, which involves a one-way allocation process. Each method is tailored to the organization's needs, ensuring costs are appropriately distributed among departments.

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