Assume Potter's Manufacturing has a Janitorial Department that supports the Maintenance Department and two line activity departments, Department A and Department B.Janitorial and Maintenance are allocated to other departments on the basis of square footage of space used.The amount of space used by each department is listed below:
$$\begin{array} { l c }
\text { Department } & \text { Square Footage Used } \
\text { Janitorial } & 600 \
\text { Maintenance } & 900 \
\text { Department A } & 4,500 \
\text { Department B } & 9,000
\end{array}$$
The expected cost for the Janitorial Department is expected to be $9,000.Using the step-down method, what is the amount of janitorial costs will be allocated to Maintenance?
A)$0
B)$540
C)$562.50
D)$5,400
E)None of the above.

Question

Assume Potter's Manufacturing has a Janitorial Department that supports the Maintenance Department and two line activity departments, Department A and Department B.Janitorial and Maintenance are allocated to other departments on the basis of square footage of space used.The amount of space used by each department is listed below:
$$\begin{array} { l c } 
\text { Department } & \text { Square Footage Used } \
\text { Janitorial } & 600 \
\text { Maintenance } & 900 \
\text { Department A } & 4,500 \
\text { Department B } & 9,000
\end{array}$$
The expected cost for the Janitorial Department is expected to be $9,000.Using the step-down method, what is the amount of janitorial costs will be allocated to Maintenance?
A)$0
B)$540
C)$562.50
D)$5,400
E)None of the above.

Quizplus · Accepted Answer

Using the step-down method, first, allocate the Janitorial Department's costs based on square footage. The total square footage excluding the Janitorial Department is 900 (Maintenance) + 4,500 (Department A) + 9,000 (Department B) = 14,400. The Maintenance Department's share is 900 / 14,400 = 1/16. Therefore, the amount of Janitorial costs allocated to Maintenance is $9,000 * 1/16 = $562.50.

Assume Potter's Manufacturing Has a Janitorial Department That Supports the Maintenance