Answer:
D. Direct method
Explanation:
Cost allocation in financial accounting can be defined as the process of identifying, gathering and assigning of cost across multiple cost objects such as products, inventory or departments.
There are various types of cost allocation methods and these are;
1. Sequential method.
2. Activity-based management method.
3. Reciprocal services method.
4. Direct method.
The direct method is an allocation method for cost, where costs of the production service department are directly allocated to the production (operating) department of a firm or business entity using appropriate allocation base and then allocated to the product itself.
Generally, the direct method is the easiest (simplest) but least accurate of the commonly used methods for allocating support department costs to production departments.
