Claremore Electronics, Inc. manufactures gauges for automobile dashboards. The company has two production departments, Molding and Assembly. There are three service departments: Human Resources, Maintenance, and Engineering. Usage of services by the various departments follows.

The budgeted costs in Claremore's service departments are: Human Resources, $180,000; Maintenance, $270,000; and Engineering, $200,000. The company rounds all calculations to the nearest dollar.
Required:
A. Use the direct method to allocate Claremore's service department costs to the production departments.
B. Determine the proper departmental sequence to use in allocating the company's service costs by the step-down method.
C. Ignoring your answer in part "B," assume that Human Resources costs are allocated first, Maintenance costs second, and Engineering costs third. Use the step-down method to allocate Claremore's service department costs.

Question

Claremore Electronics, Inc. manufactures gauges for automobile dashboards. The company has two production departments, Molding and Assembly. There are three service departments: Human Resources, Maintenance, and Engineering. Usage of services by the various departments follows.
  
The budgeted costs in Claremore's service departments are: Human Resources, $180,000; Maintenance, $270,000; and Engineering, $200,000. The company rounds all calculations to the nearest dollar. 
Required: 
A. Use the direct method to allocate Claremore's service department costs to the production departments.
B. Determine the proper departmental sequence to use in allocating the company's service costs by the step-down method.
C. Ignoring your answer in part "B," assume that Human Resources costs are allocated first, Maintenance costs second, and Engineering costs third. Use the step-down method to allocate Claremore's service department costs.

Quizplus · Accepted Answer

The Answer of Claremore Electronics, Inc. manufactures gauges for automobile dashboards. The company has two production departments, Molding and Assembly. There are three service departments: Human Resources, Maintenance, and Engineering. Usage of services by the various departments follows.
  
The budgeted costs in Claremore's service departments are: Human Resources, $180,000; Maintenance, $270,000; and Engineering, $200,000. The company rounds all calculations to the nearest dollar. 
Required: 
A. Use the direct method to allocate Claremore's service department costs to the production departments.
B. Determine the proper departmental sequence to use in allocating the company's service costs by the step-down method.
C. Ignoring your answer in part "B," assume that Human Resources costs are allocated first, Maintenance costs second, and Engineering costs third. Use the step-down method to allocate Claremore's service department costs.