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    Direct and Step Down Allocations

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    Chapter 12 Decision Guideline
    Dallas Cleaning
    Costs Allocations form Service Departments to Producing Departments
    14/07/2010

    Personnel Administrative Residential commercial Total Res/Comm Total Admin/Res/Comm Grand Total
    Direct Department Costs $70,000 $90,000 $240,000 $400,000 ??? ????
    Number of Employees 6 10 36 24 ???? ?????

    Direct Method
    Direct Department Costs $70,000 $90,000 $240,000 $400,000
    Personnel Allocation ????? ?????? 42000 28000
    Administrative Allocation ????? ????? 54000 36000
    Total Costs ????? ?????? $336,000 $464,000 ?????

    Step-Down Method
    Direct Department Costs $70,000.00 $90,000.00 $240,000.00 $400,000.00
    Personnel Actions ?????? 10000 36000 24000
    Administrative Allocation ?????? ?????? 60000 40000
    Total Costs ??????? ??????? $336,000.00 $464,000.00 ??????

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    The solution explains how to allocate cost using direct and step down methods

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