Dickson Company has two production departments and two support departments. Each department occupies the following square footage: Support department costs are allocated on the basis of the square footage of space. If the budget for administration costs is $67,000 and housekeeping costs are $45,000, what amount would be allocated to housekeeping (from administration) using the step method to allocate costs?
A)$0.
B)$7,179.
C)$8,739.
D)$67,000.

Question

Dickson Company has two production departments and two support departments. Each department occupies the following square footage:  Support department costs are allocated on the basis of the square footage of space. If the budget for administration costs is $67,000 and housekeeping costs are $45,000, what amount would be allocated to housekeeping (from administration) using the step method to allocate costs?
A)$0. 
B)$7,179. 
C)$8,739. 
D)$67,000.

Quizplus · Accepted Answer

1,500 + 5,000 + 5,000 = 11,500 
1,500 ÷ 11,500 x $67,000 = $8,739 
Housek sq ft + acct sq ft + tax sq ft = total sq ft 
Housek sq ft ÷ total sq ft x admin costs = alloc costs

Dickson Company Has Two Production Departments and Two Support Departments