Service department cost re-apportionment using the step-ladder method ignores:
AReciprocal services
BAll services
CProduction services
DDirect labour
Answer & Solution
Correct answer: A. Reciprocal services
1. Step-ladder method re-apportions service department cost in a strict downward sequence.
2. Once a service department's cost has been distributed, no further cost flows back to it.
3. Reciprocal services between two service departments are therefore ignored.
4. The simultaneous-equation method handles reciprocity properly.
_Source: ICAI BoS Inter Paper 3, Ch 4 "Overheads", §4.4.2 ¶3_
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