Dunwoody Corporation Has Two Service Departments (Maintenance and Human Resources)

question 46

Multiple Choice

Dunwoody Corporation has two service departments (Maintenance and Human Resources) and three production departments (Machining, Assembly, and Finishing) . The two service departments service the production departments as well as each other, and studies have shown that Maintenance provides the greater amount of service. On the basis of this information, which of the following cost allocations would likely occur under the step-down method?

• A) Machining cost would be allocated to Assembly.
• B) Maintenance cost would be allocated to Finishing.
• C) Maintenance cost would be allocated to Human Resources.
• D) Human Resources cost would be allocated to Maintenance.
• E) Both maintenance cost would be allocated to Finishing and maintenance cost would be allocated to Human Resources.

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