Response to the following problem:
Madison Park Co-op, a whole foods grocery and gift shop, has provided the following data to be used in its service department cost allocations:
| |
Service Departments
|
Operating Departments |
|
|
Administration
|
Janitorial
|
Groceries
|
Gifts
|
|
Departmental costs before allocations
|
$150,000
|
$40,000
|
$2,320,000
|
$950,000
|
|
Employee-hews
|
320
|
160
|
3,100
|
740
|
|
Space occupied-square feet
|
250
|
100
|
4,000
|
1,000
|
Required:
Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis of spaceoccupied.