If the step-down method is used to allocate costs and the, Ask an Expert

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Serena Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:

Maintenance Personnel Mixing Finishing
Direct dept. costs $126,000 $84,000 $105,000 $175,000
Square footage 800 400 1,600 1,200
Number of employees 8 12 24 32

If the step-down method is used to allocate costs and the Maintenance Department is allocated first, then the amount of overhead that would be allocated from Maintenance to Finishing is _____.

A. $57,000

B. $31,500

C. $42,750

D. $47,250

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Accounting Basics, Accounting

Category:- Accounting Basics
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