Dickson Company has two production departments and two support departments. Each department occupies the following square footage: Housekeeping department costs are allocated on the basis of the square footage of space. If the budget for housekeeping costs is $45,000, what amount would be allocated to Administration using the step method to allocate costs?

Question

Dickson Company has two production departments and two support departments. Each department occupies the following square footage:  Housekeeping department costs are allocated on the basis of the square footage of space. If the budget for housekeeping costs is $45,000, what amount would be allocated to Administration using the step method to allocate costs?

Quizplus · Accepted Answer

$0 - because admin provides more support (based on % of total sq ft) than housekeeping, costs from housekeeping are not allocated up.

Dickson Company Has Two Production Departments and Two Support Departments