Seymore uses the step-down method of cost allocation and allocates cost on the basis of employees.Human Resources cost amounts to $1,200,000,and the department provides more service to the firm than Cafeteria.How much Human Resources cost would be allocated to Assembly?
A)$0.
B)$480,572.
C)$444,444.
D)$666,666.
E)Some other amount.

Question

Quizplus · Accepted Answer

The step-down method allocates costs starting with the department that provides the most service to other departments. Since Human Resources provides more service than Cafeteria, its costs are allocated first. Assuming Assembly is one of the departments receiving services, and given no specific allocation percentages, the cost is divided equally among departments, resulting in $666,666 allocated to Assembly.

Seymore Uses the Step-Down Method of Cost Allocation and Allocates