Karnofski 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) $398,810
B) $397,211
C) $399,285
D) $387,190

Question

Karnofski 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) $398,810 
B) $397,211 
C) $399,285 
D) $387,190

Quizplus · Accepted Answer

The total Operating Department Y cost after allocations is $398,810. This is calculated by adding the direct costs of $298,810 to the allocated costs of $100,000.

Karnofski Corporation Uses the Step-Down Method to Allocate Service Department