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

question 15

Multiple Choice

Wisneski 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) $251,200
• B) $261,249
• C) $263,460
• D) $262,820

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Definitions:

Uncertainty

The state of having limited knowledge about a situation, making outcomes unpredictable.

Discretion

Discretion refers to the freedom to decide what should be done in a particular situation, often involving judgment and the choice to act or not act.

Visibility

The degree to which an individual's actions, position, or status can be seen and recognized by others, influencing perceptions and opportunities.

Substitutability

The extent to which one product, service, or input can replace another in usage, offering an alternative choice to consumers or producers.