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The difference between Step down method and reciprocal method in service cost allocation is as follows:
* Step -down method involves apportioning the costs of each service cost centre, not only to production cost centres, but also to some (but not all) of the service cost centres that make use of its services.
* Reciprocal ( repeated distribution) method involves apportioning the costs of each service centre not only to production cost centres, but also to other cost centres which make use of its services. Eventually apportion all costs to the production cost centres alone.
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