Morningside Company Has Two Service Departments (Maintenance and Human Resources)

Multiple Choice

Morningside Company has two service departments (Maintenance and Human Resources) and three production departments (Machining, Assembly, and Finishing) . The two service departments service the production departments as well as each other, and studies have shown that Maintenance provides the greatest amount of service. On the basis of this information, which of the following cost allocations would likely occur under the step-down method?

A) Machining cost would be allocated to Assembly.
B) Maintenance cost would be assigned to the Finishing Department only.
C) Maintenance cost would be assigned to the Human Resources Department only.
D) Human Resources cost would be allocated to Maintenance.
E) Maintenance cost would be allocated to both Finishing and Human Resources.