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

question 44

Essay

Sobczynski Corporation uses the step-down method to allocate service department costs to operating departments.The company has two service departments,Administration and Facilities,and two operating departments,Assembly and Finishing. Administration Department costs are allocated first on the basis of employee time and Facilities Department costs are allocated second on the basis of space occupied.
Required:
Allocate the service department costs to the operating departments using the step-down method.

---

Definitions:

Finance Company

A business that provides loans to individuals or other businesses and may also offer other financial services such as leasing, credit cards, or mortgage services.

Joint Payees

Individuals or entities who are designated in a financial instrument, such as a check, as the combined recipients of the payment.

Order

(1) An order to appear and bring specified documents. (2) A binding decision issued by an ALJ after a hearing.

Shelter Principle

The principle which holds that when an item is transferred, the transferee acquires all the rights the transferor had to the item.