Step-Down Method
Arbon Company has three service departments and two operating departments. Selected data concerning the five departments are presented below:
| Service Departments | operating Departments . | ||||
| Administrative | Janitorial | Equipment Maintenance | Prep | Finishing | Total |
Costs | $84,000 | $67,800 | $36,000 | $256,100 | $498,600 | $942,500 |
Number of employees | 80 | 60 | 240 | 600 | 300 | 1,280 |
Square feet of space occupied | 3,000 | 12,000 | 10,000 | 20,000 | 70,000 | 115,000 |
Machine-hours |
|
|
| 10,000 | 30',000 | 40,000 |
The company allocates service department costs by the step-down method in the following order: Administrative (number of employees), Janitorial (space occupied), and Equipment Maintenance (machine-hours).
Required:
Using the step-down method, allocate the service department costs to the operating departments.
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