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    Dallas Cleaning: Allocating Costs, Direct method, step down

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    Chapter 12 Decision Guideline Dallas Cleaning Cost Allocations from Service Departments to Producing Departments July 17, 2011

    Personnel Administrative Residental Commercial Total Res/Comm TotalAdmin/Res/Comm Grand Total
    Direct Department Costs $70,000 $90,000 $240,000 $400,000 $640,000 $640,000
    Number of Employees 6 10 36 24 60 60

    Direct Method:
    Direct Department Costs $70,000 $90,000 $240,000 $400,000 $640,000 $640,000
    Personnel Allocation
    Administrative Allocation
    Total Costs

    Step Down Method:
    Direct Department Costs $70,000 $90,000 $240,000 $400,000 $640,000 $640,000
    Step 1--Personnel Allocation
    Step 2--Administrative Allocation
    Total Costs

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    Your tutorial completes the computations for you in Excel so you have a template for similar problems. The response includes two paragraphs recommending a particular method with two reasons for it.

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