Reciprocal services between two service departments are best handled by:
AStep-ladder method
BSimultaneous equation method
CDirect method
DRepeated distribution at single pass
Answer & Solution
Correct answer: B. Simultaneous equation method
1. When two service departments serve each other, neither's total cost is known until both are.
2. The simultaneous equation method writes two equations and solves them together.
3. This captures the reciprocal flows fully.
4. Step-ladder ignores reciprocity, while the direct method ignores inter-service flows altogether.
_Source: ICAI BoS Inter Paper 3, Ch 4 "Overheads", §4.4.3 ¶1_
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