The step-down method is an allocation technique used in cost accounting to distribute service department costs to production departments. This method sequentially allocates costs, starting with the service department that provides the most services to other departments, and continues until all service department costs are allocated. The step-down method ensures a more accurate reflection of departmental expenses, enhancing cost control and decision-making.
Get Your FREE Exam Secrets Cheat Sheet!
Plus a 3-Part CMA Video Course
82,000+ accounting and finance pros got their free CMA cheat sheet.
Get yours too, today!