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  • Nama: Calvin Wijaya Kelas: LA86 NIM: 2301854220 Subyek: Managerial Accounting

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    The Madison Park Co-op grocery store allocated department costs using the step-down method. [1] Administration costs of $150,000 were first allocated to the operating departments based on employee hours, with $116,250 going to Groceries and $27,750 to Gifts. [2] Then the $40,000 costs of the Janitorial department were allocated based on space occupied, with $36,800 going to Groceries and $9,200 to Gifts. [3] This resulted in final allocated costs of $2,473,050 for Groceries and $986,950 for Gifts.

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    The Madison Park Co-op grocery store allocated department costs using the step-down method. [1] Administration costs of $150,000 were first allocated to the operating departments based on employee hours, with $116,250 going to Groceries and $27,750 to Gifts. [2] Then the $40,000 costs of the Janitorial department were allocated based on space occupied, with $36,800 going to Groceries and $9,200 to Gifts. [3] This resulted in final allocated costs of $2,473,050 for Groceries and $986,950 for Gifts.

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    53 views2 pages

    Nama: Calvin Wijaya Kelas: LA86 NIM: 2301854220 Subyek: Managerial Accounting

    Uploaded by

    Michael
    The Madison Park Co-op grocery store allocated department costs using the step-down method. [1] Administration costs of $150,000 were first allocated to the operating departments based on employee hours, with $116,250 going to Groceries and $27,750 to Gifts. [2] Then the $40,000 costs of the Janitorial department were allocated based on space occupied, with $36,800 going to Groceries and $9,200 to Gifts. [3] This resulted in final allocated costs of $2,473,050 for Groceries and $986,950 for Gifts.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    Nama : Calvin Wijaya

    Kelas : LA86
    NIM : 2301854220
    Subyek : Managerial Accounting

    EXERCISE 6-5 Step-Down Method [LO4]


    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 Department Operating Department
    Administration Janitorial Groceries Gifts
    Departmental costs before $150.000 $40.000 $2.320.000 $950.000
    allocations
    Employee-hours 320 160 3.100 740
    Space occupied-squeare 250 100 4.000 1.000
    feet

    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 space occupied.

    Answer:

    Allocation of Department Administration Cost:

    160 160 1
    Department Janitorial= = =
    160+3.100+740 4.000 25

    3.10 0 310 31
    Department Groceries= = =
    160+ 3.100+ 740 4.000 40

    74 0 740 37
    Department Gifts= = =
    160+3.100+740 4.000 2 00

    1
    Allocated ¿ Department Janitorial=150.000 x =6.000
    25
    31 0
    Allocated ¿ Department Groceries=150.000 x =11 6. 25 0
    40

    37
    Allocated ¿ Department Gifts=150.000 x =27.750
    200

    Allocation of Department Janitorial Cost:

    Allocation Ratio:

    4 . 0 00 4.000 4
    Department Groceries= = =
    (1.0 00+ 4 .00 0) 5 .000 5

    1.000 1.000 1
    Department Groceries= = =
    (1.000+ 4.000) 5.000 5

    Total Cost of Janitorial=$ 40.000+$ 6.000=$ 46.000

    4
    Allocated ¿ Department Groceries=$ 46 .000 x =$ 36.800
    5

    1
    Allocated ¿ Department Gifts=$ 46.000 x =$ 9 .2 00
    5

    Service Department Operating Department


    Administration Janitorial Groceries Gifts
    Departmental costs $150.000 $40.000 $2.320.000 $950.000
    before allocations
    Allocation:
    Administration costs -150.000 $6.000 $116.250 $27.750
    Janitarial Costs -46.000 $36.800 $9.200
    Total costs after $0 $0 $2.473.050 $986.950
    allocations

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