Please explain in every step on how the question is solved. I do not know how to
ID: 2596120 • Letter: P
Question
Please explain in every step on how the question is solved. I do not know how to solve the question.
9. Daniels Corporation uses the step-down method to allocate service department costs to operating departments.
The company has two service departments, General Management and Physical Plant, and two operating
departments, Sales, and After-Sales. Data concerning those departments follow:
Service Departments Operating Departments
General Management Physical Plant Sales After Sales
Departmental costs $36,550 $70,300 $412,500 $480,880
Employee time 5,000 2,000 27,000 14,000
Space occupied 1,000 1,000 38,000 7,000
General Management Department costs are allocated first on the basis of employee time and Physical Plant
Department costs are allocated second on the basis of space occupied. The total After-Sales Department cost after
allocations is closest to:
A. $516,196
B. $515,880
C. $503,980 This is the answer
D. $513,911
E. None of the above
10. Uchimura Corp. has two divisions: the AFE Division and the GBI Division. The corporation’s net income is
$42,000. The AFE Division’s segment profit is $24,300, and the GBI Division’s segment profit is $175,400. What
is the amount of the common fixed expense not traceable to the individual divisions?
A. $148,000
B. $157,700 This is the answer
C. $217,400
D. $161,100
E. None of the above
Explanation / Answer
9. Answer is C
10. Answer is B
Working:
Step-down method of allocation of service departent costs General Physical Sales After sales Total costs management plant 36550 70300 412500 480880 1000230 General management -36550 1700 22950 11900 0 Total 0 72000 435450 492780 1000230 Physical palnt -72000 60800 11200 Total 0 0 496250 503980 1000230 Workings: Basis General Physical Sales After sales Total general management Employee time 2000 27000 14000 43000 4.65% 62.79% 32.56% Physical palnt Space ocupied 38000 7000 45000 84.44% 15.56%