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

question 305

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.The total Operating Department Y cost after allocations is closest to:

• A) $354,220
• B) $327,340
• C) $334,900
• D) $323,860

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Definitions:

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First-Class Lever

A lever system where the fulcrum is situated between the effort and the load, allowing for force multiplication or change of direction.

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