Marvelous Company has two service departments,Maintenance and Human Resources.Marvelous Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while Human Resources costs are allocated based on number of employees.The following information has been gathered for the current year:
$\begin{array}{llll}&&\text { Human }\
&\text { Maintenlance }&\text { Resources } & \text { Mixing } & \text { Finishing } \
\text { Direct costs }& \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \
\text { Square footage }&1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees }&16 & 24 & 48 & 64
\end{array}$
Assume the step-down method is used to allocate service department costs and the Maintenance Department is allocated first.Then the amount of cost allocated from the Human Resources Department to the Maintenance Department would be ________.

Question

Quizplus · Accepted Answer

When using the step-down method and allocating the Maintenance Department costs first, no costs from the Human Resources Department would be allocated back to the Maintenance Department. The step-down method allocates service department costs to other departments but does not reallocate costs back to a service department that has already been allocated.

Marvelous Company Has Two Service Departments,Maintenance and Human Resources Assume the Step-Down Method Is Used to Allocate Service Department