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

question 59

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) $516,196
• B) $515,880
• C) $503,980
• D) $513,911

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Definitions:

Machine-Hours

A calculation of activity or production volume, taking into account the length of time machines are in use.

Direct Labor-Hours

The total hours of work contributed by employees who are directly involved in the manufacturing or production process.

Forming

The first stage in group development, characterized by members' initial coming together, getting acquainted, and exploring the boundaries of the group.

Customizing

Modifying or personalizing a product or service according to specific requirements or preferences.