Chambers, Inc. has two support departments (utilities and computer)and two operating departments (A and B). The following data are given: Services Provided By
Utilities Computer
Direct costs $55,000 $75,000
Services provided to:
Utilities ---- 15%
Computer 25% ----
Operating department A 35% 55%
Operating department B 40% 30%
If the step-down method is used and utilities allocated first, how much computer cost would be allocated to the utilities department?
A)$0
B)$18,200
C)$13,750
D)$8,250

Question

Quizplus · Accepted Answer

In the step-down method, once the utilities department costs are allocated, the utilities department is closed and does not receive any allocations. Therefore, no computer costs are allocated to the utilities department.