Kevin Company has two service departments,Maintenance and Personnel.Kevin Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year: Assume the step-down method is used to allocate service department costs and the Personnel Department is allocated first.What is the amount of cost allocated from the Personnel Department to the Finishing Department?
A)$31,500
B)$42,000
C)$72,000
D)$105,000

Question

Kevin Company has two service departments,Maintenance and Personnel.Kevin Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year:  Assume the step-down method is used to allocate service department costs and the Personnel Department is allocated first.What is the amount of cost allocated from the Personnel Department to the Finishing Department?
A)$31,500 
B)$42,000 
C)$72,000 
D)$105,000

Quizplus · Accepted Answer

The Answer of Kevin Company has two service departments,Maintenance and Personnel.Kevin Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year:  Assume the step-down method is used to allocate service department costs and the Personnel Department is allocated first.What is the amount of cost allocated from the Personnel Department to the Finishing Department?
A)$31,500 
B)$42,000 
C)$72,000 
D)$105,000

Kevin Company Has Two Service Departments,Maintenance and Personnel