Goodland Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.
-The total Operating Department Y cost after allocations is closest to:
A)$423,352
B)$425,820
C)$416,220
D)$425,966

Question

Goodland Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow:  Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.
-The total Operating Department Y cost after allocations is closest to:
A)$423,352 
B)$425,820 
C)$416,220 
D)$425,966

Quizplus · Accepted Answer

Allocation base for Service Department A costs = 2,000 + 33,000 + 16,000 = 51,000
Allocation base for Service Department B costs = 31,000 + 8,000 = 39,000
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Goodland Corporation Uses the Step-Down Method to Allocate Service Department