What are the total costs for the Residential department using the step-down method
Chapter 12-59 Decision guidelines Dallas Cleaning
Cost allocations from service departments to producing departments
25-06-2009
Direct cost # employees direct labor hrs sq foot cleaned
personnel $ 70,000 6
Admin $ 90,000 10
Residential $ 240,000 36 30,000 4,500,000
Commercial $400,000 24 45,000 9,970,000
Create
an Excel spreadsheet to allocate costs using the direct method and the
step down method. Use the results to answer questions about your
findings.
1.
What are the total costs for the Residential department using the
direct method? What are the total costs for the Commercial department
using the direct method?
2. What are the total costs for the Residential department using the step-down method?
3. What are the total costs for the Commercial department using the step-down method?
4.
Which method would you recommend that Antonio Cleaning use to allocate
their service departmentsâ costs to their producing departments? Why?
