Adam Company has two service departments,Maintenance and Human Resources.Adam 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 amount of cost allocated from the Maintenance Department to the Human Resources Department is ________.
A) $0
B) $5,040
C) $6,300
D) $6,825

Question

Quizplus · Accepted Answer

When using the step-down method and allocating the Human Resources Department costs first, no costs from the Maintenance Department would be allocated to the Human Resources Department because the Human Resources Department's costs are allocated out first.

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