Question
Dainels Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, General Management and Physical Plant,
Dainels Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, General Management and Physical Plant, and two operating departments, Sales and After-Sales. Data concerning those departments follow:
Service Department | Operating Department | |||
---|---|---|---|---|
General Management | Physical Plant | Sales | After-Sales | |
Departmental costs | $ 25,840 | $ 62,425 | $ 232,770 | $ 291,900 |
Employee time | 7,000 | 5,000 | 44,000 | 27,000 |
Space occupied | 11,000 | 5,000 | 44,000 | 22,000 |
General Management Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied. The total After-Sales Department cost after allocations is closest to:
Multiple Choice:
-
$313,275
-
$322,591
-
$322,455
-
$319,809
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