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Support Cost Allocation using Step Down Method (Cost Accounting Tutorial #33)

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Published on Sep 14, 2014

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In this managerial accounting tutorial we use the step down method to allocate costs from support departments to revenue producing departments. REMEMBER that the ultimate goal is to allocate support cost to revenue producing departments.

The step down method starts to allocate the support department that provides the most support for ALL support departments (depending on cost). So we'll allocate out the cost and figure out which one to use and then begin allocating!

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