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

question 51

Multiple Choice

Karnofski Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B.
-The total Operating Department Y cost after allocations is closest to:

• A) $398,810
• B) $397,211
• C) $399,285
• D) $387,190

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Definitions:

Total Manufacturing Costs

The aggregate of direct materials, direct labor, and manufacturing overhead incurred in the production of goods.

Work-In-Process

Items that are in the stage of production but are not yet complete, representing a cost that includes materials, labor, and overhead.

Finished Goods

Items that have finished being manufactured and are prepared to be offered to consumers.

Manufacturing Cost

The total expense involved in the production of goods, including labor, materials, and overhead costs.