Answer the following questions using the information below:
Betty's Book and Music Store has two service departments, Warehouse and Data Centre. Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours. Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $125,000 and $150,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:

-Using the step-down method, what amount of Warehouse Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)
A) $58,333
B) $116,667
C) $60,833
D) $121,667
E) $0

Question

Answer the following questions using the information below:
Betty's Book and Music Store has two service departments, Warehouse and Data Centre. Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours. Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $125,000 and $150,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
 
-Using the step-down method, what amount of Warehouse Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)
A) $58,333 
B) $116,667 
C) $60,833 
D) $121,667 
E) $0

Quizplus · Accepted Answer

The correct answer is A because the Warehouse Department has the highest percentage of interdepartmental support service, so it is allocated first. The amount allocated to Department Music is $58,333.

Answer the Following Questions Using the Information Below