Question

Exercise 48-2 Step-Down Method (L04-11) Madison Park Co-op, a whole foods grocery and gift shop, has provided the following data to be used in its service department cost allocations: Departmental costs before allocations Employee-hours Space occupied-square feet Service Departments Administration Janitorial $210,000 $60,000 460 340 700 1.100 Operating Departments Groceries Gifts $3,900,000 $350,000 2,680 180 9,100 900 Required: Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis of space occupied. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Service Departments Administration Janitorial $ 210,000 $ 80,000 Operating Departments Groceries Gifts $ 3,900,000 $ 350,000 $ Total 4,520,000 Departmental costs before allocations Allocation: Administration costs Janitorial costs Total costs after allocation $ 210,000 $ 60,000 $ 3,900,000 $ 350,000 $ 4,520,000

Answer 1

Allocation

	Service departments		Operating departments
	Administration	Janitorial	Groceries	Gifts	Total
Department costs before allocation	210000	60000	3900000	350000	4520000
Allocation
Administration cost	-210000	22312.50	175875	11812.50
Janitorial cost		-82312.50	74904	7408
Total	0	0	4150779	369221	4520000