Martinez Company has two service departments, Maintenance and Personnel, as well as 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: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \
\text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees } & 16 & 24 & 48 & 64
\end{array}$ If the step?down method is used to allocate costs and the Maintenance Department is allocated first, then the amount of overhead that would be allocated from Personnel to Maintenance is _____.

Question

Quizplus · Accepted Answer

Since the step-down method allocates service department costs to other departments and not back to other service departments, once the Maintenance Department's costs are allocated, no costs from Personnel (or any other department) would be allocated back to Maintenance.

Martinez Company Has Two Service Departments, Maintenance and Personnel, as Well