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 administration costs are $67,000 and housekeeping costs are $45,000, what amount would be allocated to the accounting department if the company uses the step method?
A)$26,870.
B)$29,130.
C)$53,739.
D)$56,000.

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 administration costs are $67,000 and housekeeping costs are $45,000, what amount would be allocated to the accounting department if the company uses the step method?
A)$26,870. 
B)$29,130. 
C)$53,739. 
D)$56,000.

Quizplus · Accepted Answer

1,500 + 5,000 + 5,000 = 11,500 
1,500 ÷ 11,500 x $67,000 = $8,739 
5,000 ÷ 11,500 x $67,000 = $29,130 
$45,000 + $8,739 = $53,739 
5,000 + 5,000 = 10,000 
5,000 ÷ 10,000 x $53,739 = $26,870 
$26,870 + $29,130 = $56,000 
Housek sq ft + acct sq ft + tax sq ft = total sq ft 
Housek sq ft ÷ total sq ft x admin costs = alloc costs admin to housek 
acct sq ft ÷ total sq ft x admin costs = alloc costs admin to acct 
housek costs + alloc costs admin to housek = total housek costs 
acct sq ft + tax sq ft = total sq ft 
acct sq ft ÷ total sq ft x housek costs = alloc costs housek to acct 
alloc costs admin to acct + alloc costs housek to acct = total acct costs

Dickson Company Has Two Production Departments and Two Support Departments