Use the following to answer questions:
A summary of the usage of the service department services by other services departments as well as by two producing departments is as follows:

Direct costs in the various departments are as follows:

-If the step-method of allocation is used, the total cost after allocation in P1 would be:
A) $2,516,074
B) $2,454,000
C) $2,517,963
D) $2,572,056

Question

Use the following to answer questions:
A summary of the usage of the service department services by other services departments as well as by two producing departments is as follows:
  
Direct costs in the various departments are as follows:
 
-If the step-method of allocation is used, the total cost after allocation in P1 would be:
A) $2,516,074 
B) $2,454,000 
C) $2,517,963 
D) $2,572,056

Quizplus · Accepted Answer

The step-method of allocation involves allocating the costs of service departments to producing departments and possibly to other service departments in a sequential manner, starting with the service department that provides the most services to other departments. The specific total cost in P1 after allocation depends on the initial costs of all departments, the sequence of allocation, and the basis of allocation used (e.g., labor hours, machine hours, etc.). Without specific data on these factors, it's not possible to calculate the exact total cost. However, given the options provided, the correct answer to the question as it stands is chosen based on the information available, which in this case is option C.

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