Tambien 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: $$\begin{array} { l l l l l }
\text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \
\text { Direct dept.costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \
\text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees } 16 & 24 & 48 & 64
\end{array}$$ If the step- down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Maintenance to Personnel is:

Question

Tambien 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: $$\begin{array} { l l l l l } 
\text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \
\text { Direct dept.costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \
\text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees } 16 & 24 & 48 & 64
\end{array}$$ If the step- down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Maintenance to Personnel is:

Quizplus · Accepted Answer

Under the step-down method, once the Personnel Department's costs are allocated, the Maintenance Department does not allocate any costs to the Personnel Department.

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