Goldfarb's Book and Music Store has two service departments,Warehouse and Data Center.Warehouse Department costs of $370,000 are allocated on the basis of budgeted warehouse-hours.Data Center Department costs of $200,000 are allocated based on the number of computer log-on hours.The costs of operating departments Music and Books are $142,500 and $171,000,respectively.Data on budgeted warehouse-hours and number of computer log-on hours are as follows:

Using the step-down method,what amount of Data Center Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round intermediary calculations to three decimal places. )

Question

Goldfarb's Book and Music Store has two service departments,Warehouse and Data Center.Warehouse Department costs of $370,000 are allocated on the basis of budgeted warehouse-hours.Data Center Department costs of $200,000 are allocated based on the number of computer log-on hours.The costs of operating departments Music and Books are $142,500 and $171,000,respectively.Data on budgeted warehouse-hours and number of computer log-on hours are as follows:

Using the step-down method,what amount of Data Center Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round intermediary calculations to three decimal places. )

Quizplus · Accepted Answer

Warehouse provided to Data Center: 590 / (590 + 1000 + 1600)= 0.185
Data Center provided to Warehouse: 250 / (250 + 860 + 1010)= 0.118
Warehouse provides the greatest amount of service to support departments,so it is allocated first.
Data Center gets costs from Warehouse = 0.185 × ($370,000)= $68,450
Data Center total costs are now = $200,000 + $68,450 = $268,450
Allocation of Data Center to Music = (860 / (860 + 1010))× $268,450 = $123,487

Goldfarb's Book and Music Store Has Two Service Departments,Warehouse and Data