Question

Departments	Employees	Kilowatt Hours Used	Work Orders Issued
Furniture	30	5,180	100
Decor	10	8,060	60
Power	6
Maintenance	4

Power department costs are $26,000. Maintenance Department costs are $30,000. Personnel Department costs are $4,000. The Personnel Department provides services to all departments. Use the step-down method of service department cost allocation and determine the amount of service department costs (Personnel, Power, and Maintenance) that will be charged to the Furniture Department.

Select one:

a. $41,210

b. $18,790

c. $0

d. $31,710

Answer 1

Step down method

	Power	Maintenance	Furniture	Decor
Personnel department	480	320	2400	800
Power department			10360	16120
Maintenance department			18950	11370
Total			31710	28290

So answer is d) $31710