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Revenue Centre Step Down Method

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Using the following example, allocate service center costs to each of the three revenue centers using the step-down method:
    

Costs    Square Feet      Meals      Employees

Service Centers
Maintenance       150,000 - 2,500 10
Dietary                 400,000 10,000 - 15
Administrative    600,000 20,000 2,500 10

Revenue Centers
Laboratory  600,000 30,000 2,500 20
Radiology  800,000 40,000 2,500 30
Nursing 2,000,000 100,000 30,000 50

4,550,000 200,000 40,000 135

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Solution Summary

Uses Step-down method for allocating service center costs to each of the three revenue centers.

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