The Uinta Company has two service departments and two operating departments. The following data are available from last year: The costs of service departments 1 and 2 are allocated on the basis of number of transactions and square feet occupied respectively. No distinction is made between fixed and variable costs.
-Assume that Uinta allocates service department costs by the step-down method,starting with Department 1.The total overhead costs allocated from Department 2 to Department Y are:
A)$18,000
B)$24,000
C)$21,000
D)$25,200

Question

The Uinta Company has two service departments and two operating departments. The following data are available from last year: The costs of service departments 1 and 2 are allocated on the basis of number of transactions and square feet occupied respectively. No distinction is made between fixed and variable costs.
-Assume that Uinta allocates service department costs by the step-down method,starting with Department 1.The total overhead costs allocated from Department 2 to Department Y are:
A)$18,000 
B)$24,000 
C)$21,000 
D)$25,200

Quizplus · Accepted Answer

Allocation base for Service Department 1 costs = 12,000 + 14,000 + 16,000 = 42,000
Allocation base for Service Department 2 costs = 3,000 + 2,000 = 5,000
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The Uinta Company Has Two Service Departments and Two Operating