Explore BrainMass

Explore BrainMass

    Direct and Step-Down Allocations

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Butler Home Products has two producing departments, Machining and Assembly, and two service departments, Personnel and Custodial.

    The company's budget for April 20X7 is
    Service Departments Production Departments
    Personnel Custodial Machining Assembly
    Direct department costs $32,000 $70,000 $600,000 $800,000
    Square feet 2,000 1,000 10,000 25,000
    Number of employees 15 30 200 250

    Butler allocates personnel costs on the basis of number of employees. Butler allocates custodial costs on the basis of square feet.

    1. Allocate personnel and custodial costs to the producing departments using the direct method.

    2. Allocate personnel and custodial costs to the producing departments using the step-down method. Allocate personnel costs first.

    © BrainMass Inc. brainmass.com June 3, 2020, 11:41 pm ad1c9bdddf
    https://brainmass.com/business/cost-allocation-of-service-department-costs/direct-and-step-down-allocations-292642

    Solution Summary

    The solution explains cost allocation using direct and step-down methods

    $2.19

    ADVERTISEMENT