Use of the step-down method


Martina, Inc. has two service departments and two production departments. The company allocates Building Maintenance cost on the basis of square footage and believes that Building Maintenance provides more service than Human Resources.The square footage occupied by each department follows.

  • Human Resources 6,000
  • Building Maintenance 13,000
  • Machining 18,000
  • Assembly 26,000

Assuming use of the step-down method, over how many square feet would the Building Maintenance cost be allocated (i.e., spread)?

  • 19000
  • 44000
  • 50000
  • 63000

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Accounting Basics: Use of the step-down method
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