Salinas Company Has Two Service Departments,Maintenance and Human Resources Assume the Step-Down Method Is Used to Allocate Service Department

question 73

Multiple Choice

Salinas Company has two service departments,Maintenance and Human Resources.Salinas Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while Human Resources costs are allocated based on number of employees.The following information has been gathered for the current year:
$\begin{array}{lllll}&&\text { Human }\\\text { Maintenance } & \text { Resources }& \text { Mixing } & \text { Finishing }\\\text { Direct costs } & \$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \\\text { Square footage } & 800 & 100 & 1,300 & 1,100 \\\text { Number of employees } & 20 & 12 & 28 & 32\end{array}$
Assume the step-down method is used to allocate service department costs.Which department should be allocated first?

• A) Maintenance
• B) Human Resources
• C) Mixing
• D) Finishing

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The practice of maintaining processes or systems in a way that does not deplete natural resources or harm the environment, ensuring long-term ecological balance.

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