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41) Strzelecki 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 Departments
Operating Departments
Service
Department A
Service
Department B
Operating
Department X
Operating
Department Y
Departmental
costs
$
37,800
$
45,780
$
247,360
$
304,330
Allocation
base A
5,000
1,000
29,000
15,000
Allocation
base B
5,000
2,000
39,000
3,000
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) $320,486
B) $318,473
C) $320,260
D) $307,660
42) The Thomas Corporation has two service departments and two operating departments. The
following data are available for a recent period:
Service Departments
Operating Departments
Administration
Custodial
Assembly
Finishing
Overhead costs
$
80,000
$
60,000
$
75,000
$
92,000
Number of employees
30
60
360
180
Square feet occupied
18,000
25,000
60,000
90,000
Thomas allocates service department costs by the step-down method in the following order:
Administrative Department costs are allocated first, based on number of employees; Custodial
Department costs are allocated second, based on square feet occupied. No distinction is made
between fixed and variable costs.
After all allocations, the total amount of overhead cost contained in the Assembly Department
will be:
A) $152,333
B) $168,550
C) $150,200
D) $155,700
43) The Thomas Corporation has two service departments and two operating departments. The
following data are available for a recent period:
Service Departments
Operating Departments
Administration
Custodial
Assembly
Finishing
Overhead costs
$
80,000
$
60,000
$
75,000
$
92,000
Number of employees
30
60
360
180
Square feet occupied
18,000
25,000
60,000
90,000
Thomas allocates service department costs by the step-down method in the following order:
Administrative Department costs are allocated first, based on number of employees; Custodial
Department costs are allocated second, based on square feet occupied. No distinction is made
between fixed and variable costs.
After the allocations, the total amount of overhead cost contained in the Finishing Department
will be:
A) $156,800
B) $151,300
C) $154,667
D) $138,450
44) Yamane Corporation, a manufacturer, 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. Data
concerning those departments follow:
Service Departments
Operating Departments
Administration
Facilities
Assembly
Finishing
Departmental costs
$
22,620
$
67,440
$
105,520
$
427,780
Labor hours
3,000
2,000
21,000
16,000
Space occupied
7,000
1,000
32,000
3,000
Administration Department costs are allocated first on the basis of labor hours and Facilities
Department costs are allocated second on the basis of space occupied.
In the first step of the allocation, the amount of Administration Department cost allocated to the
Assembly Department is closest to:
A) $4,476
B) $12,838
C) $11,310
D) $12,180
45) Yamane Corporation, a manufacturer, 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. Data
concerning those departments follow:
Service Departments
Operating Departments
Administration
Facilities
Assembly
Finishing
Departmental costs
$
22,620
$
67,440
$
105,520
$
427,780
Labor hours
3,000
2,000
21,000
16,000
Space occupied
7,000
1,000
32,000
3,000
Administration Department costs are allocated first on the basis of labor hours and Facilities
Department costs are allocated second on the basis of space occupied.
The total Finishing Department cost after allocations is closest to:
A) $443,342
B) $433,660
C) $441,102
D) $442,940
46) Blondell Legal Services, LLC, uses the step-down method to allocate service department
costs to operating departments. The firm has two service departments, Personnel and Information
Technology (IT), and two operating departments, Family Law and Corporate Law. Data
concerning those departments follow:
Service Department
Operating Department
Personnel
IT
Family Law
Corporate
Law
Departmental costs
$
85,284
$
29,703
$
883,360
$
189,010
Employees
11
25
121
163
PCs
12
26
112
137
Personnel costs are allocated first on the basis of employees and IT costs are allocated second on
the basis of PCs.
In the first step of the allocation, the amount of Personnel Department cost allocated to the
Family Law Department is closest to:
A) $32,248
B) $70,252
C) $36,336
D) $33,396
47) Blondell Legal Services, LLC, uses the step-down method to allocate service department
costs to operating departments. The firm has two service departments, Personnel and Information
Technology (IT), and two operating departments, Family Law and Corporate Law. Data
concerning those departments follow:
Service Department
Operating Department
Personnel
IT
Family Law
Corporate
Law
Departmental costs
$
85,284
$
29,703
$
883,360
$
189,010
Employees
11
25
121
163
PCs
12
26
112
137
Personnel costs are allocated first on the basis of employees and IT costs are allocated second on
the basis of PCs.
The total Corporate Law Department cost after allocations is closest to:
A) $254,137
B) $246,630
C) $254,301
D) $209,149
48) Muckenfuss Clinic uses the step-down method to allocate service department costs to
operating departments. The clinic has two service departments, Personnel and Information
Technology (IT), and two operating departments, Family Medicine and Geriatric Medicine. Data
concerning those departments follow:
Service Department
Operating Department
Personnel
IT
Family
Medicine
Geriatric
Medicine
Departmental costs
$
66,930
$
11,678
$
563,940
$
82,310
Employees
11
27
104
160
PCs
11
27
85
87
Personnel costs are allocated first on the basis of employees and IT costs are allocated second on
the basis of PCs.
In the first step of the allocation, the amount of Personnel Department cost allocated to the
Family Medicine Department is closest to:
A) $23,920
B) $58,405
C) $23,049
D) $26,366
