(Appendix 4B) Strzelecki Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow:
Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.
-In the first step of the allocation,the amount of Service Department A cost allocated to the Operating Department X is closest to:
A) $24,360
B) $21,924
C) $16,948
D) $24,914

Question

(Appendix 4B) Strzelecki Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow:
  Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.
-In the first step of the allocation,the amount of Service Department A cost allocated to the Operating Department X is closest to:
A) $24,360 
B) $21,924 
C) $16,948 
D) $24,914

Quizplus · Accepted Answer

Allocation base for Service Department A costs = 1,000 + 29,000 + 15,000 = 45,000
Allocation base for Service Department B costs = 39,000 + 3,000 = 42,000
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(Appendix 4B) Strzelecki Corporation Uses the Step-Down Method to Allocate