Exercise 17-16 Step-Down Method of Service Department Cost Allocation; Bank (LO 17-1)

Aurora National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments output for the year is as follows:

	Provider of Service
User of Service	Human Resources			Computing
Human Resources (HR)					10	%
Computing		10	%
Deposit		60	%		45	%
Loan		30	%		45	%

The budgeted costs in the two service departments for the year are as follows:

Human Resources	$	460,000
Computing		690,000

Required:

Use the step-down method to allocate the budgeted costs of the Human Resources and Computing departments to the Deposit and Loan departments. Aurora National Bank allocates the costs of the Human Resources Department first. (Do not round intermediate calculations)

	Deposit	Loan
Allocation of HR Department costs
Allocation of Computing Department costs
Total costs allocated to each department	$0	$0