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 | $ 36,550 | $ 70,300 | $ 412,500 | $ 492,780 |
Employee time | 5,000 | 2,000 | 27,000 | 14,000 |
Space occupied | 1,000 | 1,000 | 38,000 | 7,000 |
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
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$516,196
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$515,880
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$503,980
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$513,911
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