Assume that the company uses the step-down method of allocation with Custodial Services allocated first. The amount of cost allocated from the Cafeteria to Custodial Services would be:
A)$0
B)$1,652
C)$1,400
D)$1,514

Question

Quizplus · Accepted Answer

In the step-down method, once Custodial Services costs are allocated, no costs are allocated back to it from other departments like the Cafeteria. Therefore, the amount allocated from the Cafeteria to Custodial Services is $0.

Assume That the Company Uses the Step-Down Method of Allocation