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Direct Method of Cost Allocation: Process, Pros & Cons

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Which best summarizes the direct method of cost allocation?

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1. In the direct method of cost allocation, which type of department gets hit with overhead costs?

2. Which of these is an example of a service department that most clearly provides services to other service departments?

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About This Quiz & Worksheet

This quiz/worksheet combo aims to check your grasp on the direct method of cost allocation. This common method of cost allocation is important because of its straight-forward process. This assessment will help you determine how well you understand the method.

Quiz & Worksheet Goals

You may use this printable worksheet and quiz to review:

  • The level of accuracy involved in the direct method of cost allocation
  • How costs are allocated to departments
  • The pros and cons of using this method for cost allocation

Skills Practiced

  • Knowledge application - use your knowledge to answer questions about the direct method of cost allocation
  • Information recall - access the knowledge you've gained regarding the benefits and downfalls of this method
  • Interpreting information - verify that you can review information regarding costs and determine the department to which the cost is allocated using this method

Additional Learning

To learn more about this method of cost allocation, review the accompanying lesson called Direct Method of Cost Allocation: Process, Pros & Cons. This lesson covers the following objectives:

  • Discuss the process involved in the direct method of cost allocation
  • Identify the advantages and disadvantages of this method
  • Explain examples of the method
  • Describe the reasons for this method's level of accuracy
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