(Appendix 4B) The Thomas Corporation has two service departments and two operating departments. The following data are available for a recent period:
Thomas allocates service department costs by the step-down method in the following order: Administrative Department costs are allocated first, based on number of employees; Custodial Department costs are allocated second, based on square feet occupied. No distinction is made between fixed and variable costs.
-After the allocations,the total amount of overhead cost contained in the Finishing Department will be:
A) $156,800
B) $151,300
C) $154,667
D) $138,450

Question

(Appendix 4B) The Thomas Corporation has two service departments and two operating departments. The following data are available for a recent period:
  Thomas allocates service department costs by the step-down method in the following order: Administrative Department costs are allocated first, based on number of employees; Custodial Department costs are allocated second, based on square feet occupied. No distinction is made between fixed and variable costs.
-After the allocations,the total amount of overhead cost contained in the Finishing Department will be:
A) $156,800 
B) $151,300 
C) $154,667 
D) $138,450

Quizplus · Accepted Answer

Allocation base for Administration costs = 60 + 360 + 180 = 600
Allocation base for Custodial costs = 60,000 + 90,000 = 150,000
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(Appendix 4B) the Thomas Corporation Has Two Service Departments and Two