Bronson, Inc. has two support departments, Personnel and Maintenance, whose costs are to be allocated to the operating department's overhead for budgeting and inventory costing purposes. Projected amounts for the next year follow: Services Provided by
Personnel Maintenance
Direct costs $46,750 $22,500
Services provided to:
Personnel -- 10%
Maintenance 20% --
Cutting 40% 30%
Assembly 40% 60%
If the step-down method is used and the largest department (in terms of direct costs)is allocated first, the total cost allocated to assembly will be:

Question

Quizplus · Accepted Answer

1. Allocate Maintenance costs: 
- Personnel: $22,500 x 20% = $4,500 
- Cutting: $22,500 x 30% = $6,750 
- Assembly: $22,500 x 60% = $13,500

2. Allocate Personnel costs (including the costs already allocated from Maintenance): 
- Cutting: ($46,750 + $4,500) x 40% = $20,300 
- Assembly: ($46,750 + $4,500) x 40% = $20,300

3. Allocate remaining Maintenance costs (after the costs already allocated from Personnel): 
- Assembly: ($22,500 - $4,500) x 60% = $9,000

4. Total costs allocated to Assembly: $13,500 + $20,300 + $9,000 = $39,800

Therefore, the answer is B) $39,933 (rounded to the nearest dollar).