Christina Company has two service departments,Maintenance and Human Resources.Christina 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 Human Resources Department is allocated first.Then the cost allocated from the Human Resources Department to the Maintenance Department is ________.

Question

Quizplus · Accepted Answer

The Human Resources costs are allocated based on the number of employees. The Maintenance Department has 16 employees out of a total of 152 employees (16+24+48+64). Therefore, the cost allocated to Maintenance is $ \$33,600 \times \frac{16}{152} = \$4,200 $.

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