Anderson Company has two Service Departments and two Producing Departments. The costs of the Personnel Department are allocated to other departments on the basis of the number of employees in the departments. Departments and number of employees are as follows:
$\begin{array}{|l|r|}
\hline & \text { Employees } \
\hline \text { Personnel Department } & 30 \
\hline \text { Engineering Department } & 90 \
\hline \text { Producing Department No. 1 } & 590 \
\hline \text { Producing Department No. 2 } & \underline{290} \
\hline \text { Total Employees } & \underline{1,000} \
\hline
\end{array}$
- Total costs in the Personnel Department are $900,000 per year.Under the step-down method,the costs of the Personnel Department are allocated before the costs of the Engineering Department are allocated.What would be the amount of this cost allocated to the Engineering Department under the step-down method,rounded to the nearest dollar?
A) $0.
B) $81,000.
C) $83,505.
D) $92,046.

Question

Quizplus · Accepted Answer

The Personnel Department's costs are allocated based on the number of employees. The Engineering Department has 90 employees out of a total of 970 employees (excluding Personnel Department's own employees). The allocation is: $ \frac{90}{970} \times 900,000 = 83,505 $.

Anderson Company Has Two Service Departments and Two Producing Departments