Arbon Company has three service departments and two operating departments. Selected data concerning the five departments are presented below:

The company allocates service department costs by the step-down method in the following order:
Administrative (number of employees), Janitorial (space occupied), and Equipment Maintenance (machine-hours).

Required:
Using the step-down method, allocate the service department costs to the operatingdepartments.

Transcribed Image Text:

Operating Departments Service Departments Equipment Administrative Janitorial Finishing Maintenance $36,000 10,000 Prep Total $84,000 80 3,000 $67,800 60 12,000 $256,100 $498,600 $942,500 1,280 115,000 40,000 Costs.. . 600 20,000 10,000 300 70,000 30,000 240 Square feet of space occupied Machine-hours.