Wilcox Industrial has two support departments, the Information Systems Department and the Personnel Department, and two manufacturing departments, the Machining Department and the Assembly Department. The support departments service each other as well as the two production departments. Company studies have shown that the Personnel Department provides support to a greater number of departments than the Information Systems Department. If Wilcox uses the step-down method of departmental allocation, which one of the following cost allocations would not occur? Some of the costs of the:
A) Personnel Department would be allocated to the Information Systems Department.
B) Information Systems Department would be allocated to the Personnel Department.
C) Personnel Department would be allocated to the Assembly Department.
D) Personnel Department would be allocated to the Assembly Department and the Machining Department.

Question

Quizplus · Accepted Answer

The step-down method of departmental allocation allocates costs of support departments to other departments based on a predetermined sequence, typically starting with the department that provides the most services to others. Since the Personnel Department provides support to a greater number of departments than the Information Systems Department, it would likely be allocated first, meaning its costs could be allocated to the Information Systems Department, but not vice versa.

Wilcox Industrial Has Two Support Departments, the Information Systems Department