2. Wisneski 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:
Operating Department
Service Department
General Physical
Management Plant
Sales
After-
Sales
Departmental costs....
$29,880 $57,240
$286,590 $249,650
Employee time
5,000 2,000
20,000
14,000
Space occupied.
1,000 2,000
37,000 1,000
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.
Require:
(1) What is the total After-Sales Department cost
after allocations? (10%)
(2) What is the Allocation rate for General
Management Department costs? (10%)
(3) What is the Allocation rate for Physical Plant
Department costs? (10%)
