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

question 309

Multiple Choice

Dainels Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, General Management and Physical Plant, and two operating departments, Sales and After-Sales. Data concerning those departments follow: General Management Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied. The total After-Sales Department cost after allocations is closest to:

• A) $307,880
• B) $313,792
• C) $313,656
• D) $311,010

Recognize the importance of planning in SCM and how it guides strategic and tactical decisions.

Explain how technology, like EDI and extranets, enhances SCM productivity and security.

Understand the impact of supply chain strategies on product distribution and assembly activities.

Appreciate the role of innovation and responsiveness in the success of supply chain models, exemplified by companies like Zara and Amazon.

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Definitions:

First-In, First-Out

An inventory accounting method where goods first purchased or manufactured are the first ones to be sold.

Completion Percentage

In project management and accounting, it refers to the ratio of work completed to the total scope of work, often used for progress billing and revenue recognition.

Equivalent Units

A concept in cost accounting used to convert partially completed goods into an equivalent number of fully completed units for inventory accounting purposes.

Conversion Costs

The combined costs of direct labor and overhead required to transform raw materials into finished goods.