Cross 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: $$\begin{array} { l l l l l }
\text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \
\text { Direct dept.costs } & \$ 126,000 & \$ 105,000& \$ 175,000&\$84,000 \
\text { Square footage } & 800&400&1,600&1,200 \
\text { Number of employees } &8&12&24&32
\end{array}$$ If the step- down method is used to allocate costs and the Maintenance Department is allocated first, then the cost of the Mixing Department after allocation would be:
A) $279,250
B) $210,750
C) $275,500
D) $277,000

Question

Cross 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: $$\begin{array} { l l l l l } 
\text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \
\text { Direct dept.costs } & \$ 126,000 & \$ 105,000& \$ 175,000&\$84,000 \
\text { Square footage } & 800&400&1,600&1,200 \
\text { Number of employees } &8&12&24&32
\end{array}$$ If the step- down method is used to allocate costs and the Maintenance Department is allocated first, then the cost of the Mixing Department after allocation would be:
A) $279,250
B) $210,750
C) $275,500
D) $277,000

Quizplus · Accepted Answer

The Answer of Cross 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: $$\begin{array} { l l l l l } 
\text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \
\text { Direct dept.costs } & \$ 126,000 & \$ 105,000& \$ 175,000&\$84,000 \
\text { Square footage } & 800&400&1,600&1,200 \
\text { Number of employees } &8&12&24&32
\end{array}$$ If the step- down method is used to allocate costs and the Maintenance Department is allocated first, then the cost of the Mixing Department after allocation would be:
A) $279,250
B) $210,750
C) $275,500
D) $277,000

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