Derby Company has two service departments,Maintenance and Personnel.Derby Company also has 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: Assume the step-down method is used to allocate service department costs and the Personnel Department is allocated first.What is the total cost of the Finishing Department after allocation of the service departments costs?
A)$175,000
B)$275,500
C)$277,000
D)$279,250

Question

Derby Company has two service departments,Maintenance and Personnel.Derby Company also has 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:  Assume the step-down method is used to allocate service department costs and the Personnel Department is allocated first.What is the total cost of the Finishing Department after allocation of the service departments costs?
A)$175,000 
B)$275,500 
C)$277,000 
D)$279,250

Quizplus · Accepted Answer

The Answer of Derby Company has two service departments,Maintenance and Personnel.Derby Company also has 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:  Assume the step-down method is used to allocate service department costs and the Personnel Department is allocated first.What is the total cost of the Finishing Department after allocation of the service departments costs?
A)$175,000 
B)$275,500 
C)$277,000 
D)$279,250

Derby Company Has Two Service Departments,Maintenance and Personnel