Answer the following question(s)using the information below:
Betty's Book and Music Store has two service departments, Warehouse and Data Centre.Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours.Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours.The costs of operating departments Music and Books are $125,000 and $150,000, respectively.Data on budgeted warehouse-hours and number of computer log-on hours are as follows:

-Using the step-down method, what amount of Warehouse Department cost will be allocated to Music Department if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)
A)$58,333
B)$116,667
C)$60,833
D)$121,667
E)$0

Question

Answer the following question(s)using the information below:
Betty's Book and Music Store has two service departments, Warehouse and Data Centre.Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours.Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours.The costs of operating departments Music and Books are $125,000 and $150,000, respectively.Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
 
-Using the step-down method, what amount of Warehouse Department cost will be allocated to Music Department if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)
A)$58,333 
B)$116,667 
C)$60,833 
D)$121,667 
E)$0

Quizplus · Accepted Answer

The step-down method allocates service department costs to production departments based on the percentage of interdepartmental support services provided. In this case, the Warehouse Department is a service department, and the Music Department is a production department. The question states that the service department with the highest percentage of interdepartmental support service is allocated first. Therefore, the Warehouse Department will be allocated to the Music Department first, and the amount allocated will be based on the percentage of interdepartmental support services provided by the Warehouse Department to the Music Department.

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