The Blue Sky Clinic has two service departments (S1 and S2) and two "production" departments (P1 and P2). The service departments service the "production" departments as well as each other, and studies have shown that S2 provides the greater amount of service. Which of the following choices correctly denotes an allocation that would not occur under (1) the direct method and (2) the step-down method of cost allocation? Direct MethodStep-Down MethodA.S1's cost would be allocated to P1.S1's cost would be allocated to P1.B.P1's cost would be allocated to P2.P1's cost would be allocated to P2.C.S2's cost would be allocated to S1.S2's cost would be allocated to S1.D.P1's cost would be allocated to S1.P1's cost would be allocated to S1.E.None of the answers is correct.
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
Answer: E
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The installment method of recognizing revenue
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