Seymore Company has two service departments (Cafeteria and Human Resources) and two production departments (Machining and Assembly). The number of employees in each department follows.
Seymore uses the step-down method of cost allocation and allocates cost on the basis of employees. Human Resources cost amounts to $1,200,000, and the department provides more service to the firm than Cafeteria. How much Human Resources cost would be allocated to Machining? (select one)
$0. $428,572. $444,444. $480,000.
None of the other answers are correct.
(Please show work)
Step Down Method:
The step down method (or step method) is a method used to allocate the cost incurred of a service department to another service department. This method will first allocate the greatest cost to the least cost.
Answer and Explanation:
Let us compute the total number of employees except the number of employees in the human resource department. The total employees...
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from Accounting 301: Applied Managerial AccountingChapter 4 / Lesson 3
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