Question

Daniels Corporation uses the step-down method to allocate service department costs to operating departments.

Answer 1

Answer:

C 503,980 dollars

Explanation:

$\left[\begin{array}{ccccc}&General&Physical&Sales&After-sales\\ General&&2,000&27,000&14,000\\ Physical&1,000&&38,000&7,000\\ Direct \: Cost&36,550&70,300&412,500&480,880\\ Allocate G&-36,550&1,700&22,950&11,900\\ Subtotal&0&72,000&435,450&492,780\\ Allocate P&0&-72000&60,800&11,200\\ Total&&&496,250&503,980\\\end{array}\right]$

We determinate each service deparment rate:

general: 36,550 / (2,000 + 27,000 + 14,000) = 0.85

we then assign cost of general department and repeat the process for physical

then for physical we do the same:

72,000 / (38,000 + 7.000) = 1.60