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The Star Company uses the step method for allocating the costs of its service departments to operating departments. The company has two service departments and two operating departments. The selected information for the four departments is given below. SERVICE DEPARTMENTS DEPARTMENTS OPERATING Dept. A Dept. B Dept. X Dept. Y Total Departmental costs before allocation $180,000 $45,000 $130,500 $344,500 $700,000 Employee hours Space occupied - square feet 6,000 3,000 9,000 15,000 33,000 5,000 100 3,000 22,000 30,100 The company uses employee hours as the base for allocating the cost of department A and space occupied for allocating the cost of department B.

The Star Company uses the step method for allocating the costs of its service departments to operating departments. The company has two service departments and two operating departments. The selected information for the four departments is given below. SERVICE DEPARTMENTS DEPARTMENTS OPERATING Dept. A Dept. B Dept. X Dept. Y Total Departmental costs before allocation $180,000 $45,000 $130,500 $344,500 $700,000 Employee hours Space occupied - square feet 6,000 3,000 9,000 15,000 33,000 5,000 100 3,000 22,000 30,100 The company uses employee hours as the base for allocating the cost of department A and space occupied for allocating the cost of department B.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Allocate the cost of service departments to operating department using step down method

The Star Company uses the step method for allocating the costs of its service departments to operating departments. The company has two service departments and two operating departments. The selected information for the four departments is given below: SERVICE DEPARTMENTS DEPARTMENTS OPERATING Dept. A Dept. B Dept. X Dept. Y Total Departmental costs before allocation $180,000 $45,000 $130,500 $344,500 $700,000 Employee hours Space occupied - square feet 6.000 3,000 9,000 15,000 33,000 5.000 100 3,000 22,000 30,100 The company uses employee hours as the base for allocating the cost of department A and space occupied for allocating the cost of department B.
Transcribed Image Text:The Star Company uses the step method for allocating the costs of its service departments to operating departments. The company has two service departments and two operating departments. The selected information for the four departments is given below: SERVICE DEPARTMENTS DEPARTMENTS OPERATING Dept. A Dept. B Dept. X Dept. Y Total Departmental costs before allocation $180,000 $45,000 $130,500 $344,500 $700,000 Employee hours Space occupied - square feet 6.000 3,000 9,000 15,000 33,000 5.000 100 3,000 22,000 30,100 The company uses employee hours as the base for allocating the cost of department A and space occupied for allocating the cost of department B.
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