Deardurff 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: 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)$20,121
B)$13,937
C)$15,637
D)$14,430

Question

Deardurff 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:  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)$20,121 
B)$13,937 
C)$15,637 
D)$14,430

Quizplus · Accepted Answer

Allocation base for Personnel costs = 24 + 111 + 176 = 311
Allocation base for IT costs = 91 + 163 = 254
 11eaa48f_7bcb_be12_9e4a_1f691d843970_TB2485_00

Deardurff Legal Services, LLC, Uses the Step-Down Method to Allocate