Use the following information for the next 4 questions. Bronson, Inc. has two support departments, Personnel and Maintenance, whose costs are to be allocated to the operating department's overhead for budgeting and inventory costing purposes. Projected amounts for the next year follow:
-If the step-down method is used and the largest department (in terms of direct costs) is allocated first, the total cost allocated to assembly will be
A) $32,200
B) $39,933
C) $29,317
D) $24,500

Question

Use the following information for the next 4 questions. Bronson, Inc. has two support departments, Personnel and Maintenance, whose costs are to be allocated to the operating department's overhead for budgeting and inventory costing purposes. Projected amounts for the next year follow: 
-If the step-down method is used and the largest department (in terms of direct costs) is allocated first, the total cost allocated to assembly will be
A) $32,200 
B) $39,933 
C) $29,317 
D) $24,500

Quizplus · Accepted Answer

The step-down method allocates service department costs to other service departments and production departments in a sequential manner. By allocating the largest department first, the costs are distributed in a way that maximizes the allocation to the assembly department, resulting in $39,933.

Use the Following Information for the Next 4 Questions