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    Samson Enterprises: Allocate costs using the step-down method

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    Samson Enterprises uses the step-down method to allocate service department costs to revenue-producing departments. The support departments, personnel and janitorial, allocate their costs based on the number of employees and departmental square footage, respectively. Relevant data are presented as follows:

    Personnel Janitorial Department 1 Department 2
    Employees 7 10 20 25
    Square feet 3,000 1,000 10,000 15,000
    Direct costs $400,000 $500,000 $1,500,000 $2,000,000

    Allocate the personnel and janitorial costs to the revenue-producing departments using the step-down method.

    Personnel costs allocated to janitorial ___________
    Personnel costs allocated to Department 1 _________
    Personnel costs allocated to Department 2 _________
    Janitorial costs allocated to Department 1 _________
    Janitorial costs allocated to Department 2 _________

    © BrainMass Inc. brainmass.com June 3, 2020, 5:51 pm ad1c9bdddf
    https://brainmass.com/business/accounting/samson-enterprises-allocate-costs-step-down-method-40135

    Solution Preview

    Personnel Janitorial Department 1 Department 2
    Employees 7 10 20 25
    Square feet 3,000 1,000 ...

    Solution Summary

    The solution makes the calculations and explains the procedure.

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