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

Essay

Coakley 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.