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https://courses.lumenlearning.com/tcc-managacct/chapter/direct-method-of-allocation/
The direct method allocates costs of each of the service departments to each operating department based on each department’s share of the allocation base. Services used by other service departments are ignored. This means the direct method does not recognize service performed by other service departments.
https://www.accountingformanagement.org/direct-method-of-cost-allocation/
If the direct method of cost allocation is used, the cost incurred by department A and department B would be allocated to department C and department D only. The cost of department A and department B would not be allocated to each other even if the two departments provide a significant amount of service to each other.
https://www.principlesofaccounting.com/chapter-23/service-costs/
Direct Method. The direct method transfers the cost of a service department directly to the productive departments that rely on the services. The allocation is usually based upon some logical benchmark. For example, janitorial services may be allocated to productive departments based on square footage used by the productive departments.
https://xplaind.com/896817/direct-allocation-method
Apr 16, 2013 · Direct allocation method is one of the four techniques used to reallocate service departments' overheads to production departments. It is different from the other reallocation methods because it completely disregards any services provided by one service department to another.
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