Service Departments Operating Departments Gifts Administration Janitorial Groceries Departmental costs before allocations $150,000 $40,000 $2,320,000 $950,000 160 Employee-hours... Space occupied-square feet 320 250 3,100 4,000 740 1,000 100
Service Departments Operating Departments Gifts Administration Janitorial Groceries Departmental costs before allocations $150,000 $40,000 $2,320,000 $950,000 160 Employee-hours... Space occupied-square feet 320 250 3,100 4,000 740 1,000 100
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Step-Down Method
Madison Park Co-op, a whole foods grocery and gift shop, has provided the following data to be used in its service department cost allocations:
Required:
Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis of space occupied.
Transcribed Image Text:Service Departments
Operating Departments
Gifts
Administration Janitorial Groceries
Departmental costs before allocations
$150,000
$40,000 $2,320,000 $950,000
160
Employee-hours...
Space occupied-square feet
320
250
3,100
4,000
740
1,000
100
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