Allocating Cost Using Direct and Step-Down Method

Allocating Cost Using Direct and Step-Down Method -...

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Allocating Cost Using Direct and Step-Down Methods Scenario: Antonio Cleaning has asked you to help them determine the best method for allocating costs from their service departments to their producing departments. Additional background information for your spreadsheet appears in Fundamental Assignment Material 12-B2. Exhibit 12-4 on page 532 illustrates the types of calculations that are used for allocating costs using the direct method and the step- down method. When you have completed the spreadsheet, answer the following questions: 1. What are the total costs for the Residential department using the direct method? What are the total costs for the Commercial department using the direct method? 2. What are the total costs for the Residential department using the step-down method? 3. What are the total costs for the Commercial department using the step-down method? 4. Which method would you recommend that Antonio Cleaning use to allocate their service departments’ costs to their producing departments? Why?
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Allocating Cost Using Direct and Step-Down Method -...

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