Strzelecki Corporation Uses the Step-Down Method to Allocate Service Department

question 327

Multiple Choice

Strzelecki Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.In the first step of the allocation, the amount of Service Department A cost allocated to the Operating Department X is closest to:

• A) $24,360
• B) $21,924
• C) $16,948
• D) $24,914

---

Definitions:

Interest Rate

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), representing the value of all goods and services produced over a specific period.

Money Supply

The total amount of money resources gathered in an economy at a certain time.

Planned Investment Spending

Expenditure on new physical capital intended by firms, which is part of aggregate spending in the economy.