Clark Corp. has three service departments, Chocolate, Caramel, and Nougat, as well as two production departments, Melting and Wrapping. The Chocolate and Caramel department costs are allocated based upon ounces, and the Nougat department's costs based upon pieces. The following information is also available: Required: Assume the step-down method of allocating costs is used, and the Chocolate department renders the greatest service, with the Caramel department a close second. Determine the amount of each service department's costs that will be allocated to each production department.

Question

Clark Corp. has three service departments, Chocolate, Caramel, and Nougat, as well as two production departments, Melting and Wrapping. The Chocolate and Caramel department costs are allocated based upon ounces, and the Nougat department's costs based upon pieces. The following information is also available:  Required: Assume the step-down method of allocating costs is used, and the Chocolate department renders the greatest service, with the Caramel department a close second. Determine the amount of each service department's costs that will be allocated to each production department.

Quizplus · Accepted Answer

The Answer of Clark Corp. has three service departments, Chocolate, Caramel, and Nougat, as well as two production departments, Melting and Wrapping. The Chocolate and Caramel department costs are allocated based upon ounces, and the Nougat department's costs based upon pieces. The following information is also available:  Required: Assume the step-down method of allocating costs is used, and the Chocolate department renders the greatest service, with the Caramel department a close second. Determine the amount of each service department's costs that will be allocated to each production department.