DISCUSS in brief three main methods of allocating support departments costs to operating departments.

(a) The three main methods of allocating support departments costs to operating departments are: (i) Direct re-distribution method: Under this method, support department costs are directly apportioned to various production departments only. This method does not consider the service provided by one support department to another support department. (ii) Step method: Under this method the cost of the support departments that serves the maximum numbers of departments is first apportioned to other support departments and production departments. After this the cost of support department serving the next largest number of departments is apportioned. In this manner we finally arrive on the cost of production departments only. (iii) Reciprocal service method: This method recognises the fact that where there are two or more support departments they may render services to each other and, therefore, these inter-departmental services are to be given due weight while re-distributing the expenses of the support departments. The methods available for dealing with reciprocal services are: (a) Simultaneous equation method (b) Repeated distribution method (c) Trial and error method.