Exam 9: Service Department Allocations

Assume that the company uses the step-down method of allocation with Custodial Services allocated first. The amount of Custodial Services cost allocated to the Assembly Department would be:

Pujol Children's Clinic allocates service department costs to operating departments using the step-down method. The clinic has two service departments, Administration and Information Technology (IT), and two operating departments, Prenatal and Pediatric. Data concerning those departments follow: Administration costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. The total Pediatric Department cost after allocations is closest to:

Mazon Corporation uses the direct method to allocate its two service department costs to its two operating departments. Data concerning those departments follow: Service Department A costs are allocated on the basis of allocation base A and Service Department B costs are allocated on the basis of allocation base B.Required: Allocate the service department costs to the operating departments using the direct method.

Assume that the company uses the direct method of allocation. The predetermined overhead rate in the Assembly Department would be closest to:

Grable 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:

The total amount of Information Technology Department cost allocated to the two operating departments is closest to:

The step-down method of allocating service department costs takes into account some, but not all, of the reciprocal services that service departments provide to each other.

Delta Manufacturing Company has two service departments, Custodial Services and Maintenance, and three production departments, Cutting, Milling, and Assembly. Delta allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow: Required: a. Prepare a schedule to allocate service department costs to the production departments by the direct method (round all dollar amounts to the nearest whole dollar). b. Prepare a schedule to allocate service department costs to the production departments by the step-down method, allocating Custodial Services first (round all amounts to the nearest whole dollar).

Cieslak, Inc., allocates service department costs to operating departments using the step-down method. The company has two service departments, Administration and Physical Plant, and two operating departments, Assembly and Testing. Data concerning those departments follow: Administration 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 Testing Department cost after allocations is closest to:

The direct method is used by Ohair Clinic to allocate its service department costs to its operating departments. Data concerning those departments follow: Information Technology costs are allocated on the basis of computers and Personnel costs are allocated on the basis of employees. Required: Allocate the service department costs to the operating departments using the direct method.

The amount of Personnel Department cost that would be allocated to Operating Department 2 under the direct method would be:

The step-down method allocates less total cost to operating departments than does the direct method.

In the first step of the allocation, the amount of Personnel Department cost allocated to the Family Medicine Department is closest to:

Suppose the company uses the direct method of allocation. The amount of Personnel Department cost that would be allocated to Operating Department 2 would be:

Castle Corporation has two service departments and two operating departments. The number of employees in each department are: The fixed costs of the Personnel Department are allocated on the basis of the number of employees. If these costs are budgeted at $37,125, the amount of cost allocated to the Cafeteria under the step-down method would be:

The total Operating Department Y cost after allocations is closest to:

Suppose the company uses the step-down method of allocation and Personnel Department costs are allocated first. The amount of this cost allocated to the Engineering Department under the step-down method would be:

The total Customer Solutions Department cost after the allocations of service department costs is closest to:

Assume that the company uses the step-down method of allocation with Custodial Services allocated first. The amount of cost allocated from the Cafeteria to the Cutting Department would be:

Under the step-down method, once a service department's costs have been allocated to other departments, no costs should be reallocated back to the service department.