(Appendix 4B)Assume that the company uses the step-down method of allocating Service Department costs to Operating Departments,and Building and Grounds costs are allocated first.How much Personnel Department cost would be allocated to Operating Department A?
A) $0.
B) $90,000.
C) $92,430.
D) $205,400.

Question

Quizplus · Accepted Answer

In the step-down method, Building and Grounds is allocated first. Building and Grounds costs of $154,050 will be allocated based on the allocation percentages of 60% for Operating Department A and 40% for Operating Department B, resulting in $92,430 allocated to Operating Department A (60% x $154,050). Since Personnel Department only provides services to Operating Department B, no cost will be allocated to Operating Department A. Therefore, the answer is C.

(Appendix 4B)Assume That the Company Uses the Step-Down Method of Allocating