(Appendix 4B)Under the Step-Down Method of Allocation,what Would Be the Amount

question 17

Multiple Choice

(Appendix 4B) Under the step-down method of allocation,what would be the amount of Custodial Services cost allocated to the Assembly Department?

• A) $0.
• B) $120,000.
• C) $126,000.
• D) $140,000.

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Definitions:

Transfer Price

The selling price for goods and services among different segments within the same enterprise.

Idle Capacity

Unused production capability or facilities that could be producing goods or services but are currently not due to lack of demand or inefficiency.

Connector Division

A segment or department within a company that specializes in producing connectors, often seen in electronics and manufacturing firms, aiming to enhance operational efficiency and product specialization.

Minimal Acceptable

The lowest standard or level that is considered satisfactory or acceptable.