The correct answer is D. all of the above.
The direct method, step-down method, and reciprocal method are all methods used to allocate costs of reciprocal support departments.
The direct method allocates costs of support departments to production departments based on the direct use of the support department’s services by the production departments.
The step-down method allocates costs of support departments to production departments in a sequential manner, starting with the support department that provides the most services to other support departments.
The reciprocal method allocates costs of support departments to production departments based on the reciprocal use of the support departments’ services by the production departments.
The reciprocal method is the most accurate method of allocating costs of support departments, but it is also the most complex. The direct method is the simplest method, but it is not always the most accurate. The step-down method is a compromise between the direct method and the reciprocal method.
The choice of method to use depends on the specific circumstances of the organization.