Indicate which of the following answers to the statement below represents the best choice, then support your view. Then indicate why one of the other choices is incorrect.

Consider the following statements about the direct method of service department cost allocation:

I. Under the direct method, all service department costs are eventually allocated to production departments.

II. The order in which service department costs are allocated to production departments is important.

III. Once a service department's costs have been allocated, no costs are re-circulated back to that department.

Which of the above statements is (are) correct?

a. I only.

b. II only.

c. I and II.

d. I and III.

e. I, II, and III.