Deardurff Legal Services, LLC, uses the step-down method to allocate service department costs to operating departments. The firm has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Law and Corporate Law. Data concerning those departments follow: Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.
-The total Corporate Law Department cost after allocations is closest to:
A)$417,451
B)$417,540
C)$410,562
D)$394,660

Question

Deardurff Legal Services, LLC, uses the step-down method to allocate service department costs to operating departments. The firm has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Law and Corporate Law. Data concerning those departments follow:  Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs.
-The total Corporate Law Department cost after allocations is closest to:
A)$417,451 
B)$417,540 
C)$410,562 
D)$394,660

Quizplus · Accepted Answer

Allocation base for Personnel costs = 24 + 111 + 176 = 311
Allocation base for IT costs = 91 + 163 = 254
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Deardurff Legal Services, LLC, Uses the Step-Down Method to Allocate