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A company has two service departments and two operating departments. Data concerning those departments follow: Service Departments Departmental costs Allocation Base A Allocation Base
A company has two service departments and two operating departments. Data concerning those departments follow: Service Departments Departmental costs Allocation Base A Allocation Base Z Svc-A $ 49,500 8,000 6,000 Svc-Z $ 32,340 2,000 3,000 Operating Departments Op-1 $ 309,040 34,000 31,000 Op-2 $ 209,880 14,000 2,000 The company uses the step-down method to allocate service department costs to the operating departments. Svc-A costs are allocated first using Allocation Base A and Svc-Z costs are allocated second based on Allocation Base Z. The total cost of the operating department Op-2 after allocation would be:
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