Scribd Logo
Upload

Welcome to Scribd!

  • Required:: Service Department Operating Department

    Uploaded by

    Michael
    12 views2 pages
    The document provides cost allocation data for the service departments of Administration and Janitorial and operating departments of Groceries and Gifts for Madison Park Co-op. Using the step-down method, Administration costs of $150,000 were allocated to the operating departments based on employee-hours. Then, Janitorial costs of $40,000 plus the $6,000 allocated from Administration, for a total of $46,000, were allocated to the operating departments based on space occupied. This resulted in allocated costs to Groceries of $116,250 for Administration and $36,800 for Janitorial, and to Gifts of $27,750 for Administration and $9,200 for Janitorial

    Original Description:

    Accounting

    Original Title

    anjim

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document provides cost allocation data for the service departments of Administration and Janitorial and operating departments of Groceries and Gifts for Madison Park Co-op. Using the step-down method, Administration costs of $150,000 were allocated to the operating departments based on employee-hours. Then, Janitorial costs of $40,000 plus the $6,000 allocated from Administration, for a total of $46,000, were allocated to the operating departments based on space occupied. This resulted in allocated costs to Groceries of $116,250 for Administration and $36,800 for Janitorial, and to Gifts of $27,750 for Administration and $9,200 for Janitorial

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    12 views2 pages

    Required:: Service Department Operating Department

    Uploaded by

    Michael
    The document provides cost allocation data for the service departments of Administration and Janitorial and operating departments of Groceries and Gifts for Madison Park Co-op. Using the step-down method, Administration costs of $150,000 were allocated to the operating departments based on employee-hours. Then, Janitorial costs of $40,000 plus the $6,000 allocated from Administration, for a total of $46,000, were allocated to the operating departments based on space occupied. This resulted in allocated costs to Groceries of $116,250 for Administration and $36,800 for Janitorial, and to Gifts of $27,750 for Administration and $9,200 for Janitorial

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    EXERCISE 6-5 Step-Down Method [LO4]

    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:
    Service Department Operating Department
    Administration Janitorial Groceries Gifts
    Departmental costs before $150.000 $40.000 $2.320.000 $950.000
    allocations
    Employee-hours 320 160 3.100 740
    Space occupied-squeare 250 100 4.000 1.000
    feet

    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.

    Answer:

    Allocation of Department Administration Cost:

    160 160 1
    Department Janitorial= = =
    160+3.100+740 4.000 25

    3.100 310 31
    Department Groceries= = =
    160+ 3.100+ 740 4.000 40

    740 740 37
    Department Gifts= = =
    160+3.100+740 4.000 200

    1
    Allocated ¿ Department Janitorial=150.000 x =6.000
    25

    310
    Allocated ¿ Department Groceries=150.000 x =116.250
    40

    37
    Allocated ¿ Department Gifts=150.000 x =27.750
    200
    Allocation of Department Janitorial Cost:

    Allocation Ratio:

    4.000 4.000 4
    Department Groceries= = =
    (1.000+ 4.000) 5.000 5

    1.000 1.000 1
    Department Groceries= = =
    (1.000+ 4.000) 5.000 5

    Total Cost of Janitorial=$ 40.000+$ 6.000=$ 46.000

    4
    Allocated ¿ Department Groceries=$ 46.000 x =$ 36.800
    5

    1
    Allocated ¿ Department Gifts=$ 46.000 x =$ 9.200
    5

    Service Department Operating Department


    Administration Janitorial Groceries Gifts
    Departmental costs $150.000 $40.000 $2.320.000 $950.000
    before allocations
    Allocation:
    Administration costs -150.000 $6.000 $116.250 $27.750
    Janitarial Costs -46.000 $36.800 $9.200
    Total costs after $0 $0 $2.473.050 $986.950
    allocations

    You might also like