Dainels Corporation uses the step-down method to allocate service department costs to operating departments.The company has two service departments,General Management and Physical Plant,and two operating departments,Sales and After-Sales.Data concerning those departments follow:
General Management Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied.The total After-Sales Department cost after allocations is closest to:
A) $516,196
B) $515,880
C) $503,980
D) $513,911

Question

Dainels Corporation uses the step-down method to allocate service department costs to operating departments.The company has two service departments,General Management and Physical Plant,and two operating departments,Sales and After-Sales.Data concerning those departments follow:
 General Management Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied.The total After-Sales Department cost after allocations is closest to:
A) $516,196 
B) $515,880 
C) $503,980 
D) $513,911

Quizplus · Accepted Answer

Allocation base for General Management costs = 2,000 + 27,000 + 14,000 = 43,000
Allocation base for Physical Plant costs = 38,000 + 7,000 = 45,000
 11ea7761_18b4_65ed_81a5_57423a512f07_TB2580_00

Dainels Corporation Uses the Step-Down Method to Allocate Service Department