Chapter 4.B, Problem 5P

To determine

Concept Introduction:

Step-Down Method of Cost Allocation:

Step-down method of cost allocation enables different departments to allocate costs to each other. In this method, the service department costs are allocated to operating departments and other support departments. The cost of service department which provides the highest amount of service is allocated first to other departments. The other service department costs are allocated sequentially in a descending order thereby the least cost service department is allocated finally.

To prepare: The cost allocation using the step-down method