EPPA2813 ESTION 2 (25 MARKS eta Corporation uses the step-down method to allocate service department co erating departments. The company has two service costs to departments. Administration and cilities, and two operating departments, Assembly and Finishing Service Department Operating Department Admini stration Facilities Assembly Finishing Departmental cost. S31590 $78.180 $156.010 $560.970 mployee time Space occupied 16.000 8.000 4.000 5.000 7.000 2.000 1.000 dministration Department costs are allocated on the basis of employee time and Facilities epartment costs are allocated on the basis of space occupied equired: a) Allocate the service department costs to the operating departments using the direct (8 marks) method b) Allocate the service department costs to the operating departments using the step-down method. Administration Department costs are allocated first and Facilities Department (12 marks) Discuss the advantage of using step-down method in comparison with direct method. costs are allocated second. (5 marks) QUESTION 3 (25 MARKS Company manufactures two products, Product F and Product G. The company expects and sell 2,600 units of Product F and 6,000 units of Product G during the current uses activity-based costing to compute unit product costs for external The cost drivers for machine setups is number of setups; for purchase orders is number forders; and for general factory is machine hours. Data relating to the company's three activity cost pools are given below for the current year: Estimated Overhead Activity Cost Pool Costs Product F Product G Total Machine setups... $10.400 Purchase orders.... Gieneral factoryS65.340 Estimated Activit 80 810 2,340 $88.440 180 1.200 3,600 260 2.010 5,940 EPPA2813 ESTION 2 (25 MARKS eta Corporation uses the step-down method to allocate service department co erating departments. The company has two service costs to departments. Administration and cilities, and two operating departments, Assembly and Finishing Service Department Operating Department Admini stration Facilities Assembly Finishing Departmental cost. S31590 $78.180 $156.010 $560.970 mployee time Space occupied 16.000 8.000 4.000 5.000 7.000 2.000 1.000 dministration Department costs are allocated on the basis of employee time and Facilities epartment costs are allocated on the basis of space occupied equired: a) Allocate the service department costs to the operating departments using the direct (8 marks) method b) Allocate the service department costs to the operating departments using the step-down method. Administration Department costs are allocated first and Facilities Department (12 marks) Discuss the advantage of using step-down method in comparison with direct method. costs are allocated second. (5 marks) QUESTION 3 (25 MARKS Company manufactures two products, Product F and Product G. The company expects and sell 2,600 units of Product F and 6,000 units of Product G during the current uses activity-based costing to compute unit product costs for external The cost drivers for machine setups is number of setups; for purchase orders is number forders; and for general factory is machine hours. Data relating to the company's three activity cost pools are given below for the current year: Estimated Overhead Activity Cost Pool Costs Product F Product G Total Machine setups... $10.400 Purchase orders.... Gieneral factoryS65.340 Estimated Activit 80 810 2,340 $88.440 180 1.200 3,600 260 2.010 5,940