The Glowmeter Manufacturing Company has two production departments (Assembly and Finishing) and two service departments (Human Resources and Maintenance). The projected usage of the two service departments is as follows: $\begin{array} { l r r }
& \text { Use of Human } & \text { Use of } \
& \text { Resources } & \text { Maintenance } \
\text { Human Resources } & \text { N/A } & 10 \% \
\text { Maintenance } & 5 \% & \text { N/A } \
\text { Assembly } & 70 \% & 30 \% \
\text { Finishing } & 25 \% & 60 \%
\end{array}$ The budgeted costs in the service departments are: Human Resources, $60,000 and Maintenance, $30,000. Using the step-down method and assuming the Human Resources Department cost is allocated first, the total amount of service department cost allocated to the Finishing Department is:
A)$0.
B)$15,000.
C)$37,000.
D)$42,000.
E)$60,000.

Question

The Glowmeter Manufacturing Company has two production departments (Assembly and Finishing) and two service departments (Human Resources and Maintenance). The projected usage of the two service departments is as follows: $\begin{array} { l r r } 
& \text { Use of Human } & \text { Use of } \
& \text { Resources } & \text { Maintenance } \
\text { Human Resources } & \text { N/A } & 10 \% \
\text { Maintenance } & 5 \% & \text { N/A } \
\text { Assembly } & 70 \% & 30 \% \
\text { Finishing } & 25 \% & 60 \%
\end{array}$ The budgeted costs in the service departments are: Human Resources, $60,000 and Maintenance, $30,000. Using the step-down method and assuming the Human Resources Department cost is allocated first, the total amount of service department cost allocated to the Finishing Department is:
A)$0.
B)$15,000.
C)$37,000.
D)$42,000.
E)$60,000.

Quizplus · Accepted Answer

The total amount of service department cost allocated to the Finishing Department is $37,000. This is calculated as follows:- Allocate Human Resources costs to Maintenance: $60,000 x 5% = $3,000- Allocate Maintenance costs to Assembly: $30,000 x 30% = $9,000- Allocate Maintenance costs to Finishing: $30,000 x 60% = $18,000- Allocate Human Resources costs to Assembly: $60,000 x 70% = $42,000- Allocate Human Resources costs to Finishing: $60,000 x 25% = $15,000Total service department cost allocated to Finishing: $9,000 + $18,000 + $15,000 = $37,000

The Glowmeter Manufacturing Company Has Two Production Departments (Assembly and Finishing)