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
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
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Allocate the cost of service departments to operating department using step down method
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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