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Blondell Legal Services, LLC, uses the step-down method

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Question;Blondell Legal;Services, LLC, uses the step-down method to allocate service department costs;to operating departments. The firm has two service departments, Personnel and;Information Technology (IT), and two operating departments, Family Law and;Corporate Law. Data concerning those departments follow;Service Department;Operating Department;Personnel;IT;Family;Law;Corporate;Law;Departmental costs;$85,284;$29,703;$883,360;$189,010;Employees;11;25;121;163;PCs;12;26;112;137;Personnel costs are allocated first on the;basis of employees and IT costs are allocated second on the basis of PCs.;Requirements;Assuming the Personnel Department provides;the greatest service, determine the costs in the operating departments by the;step method of allocation.;Assuming the Personnel Department provides;the greatest service, determine the costs in the operating departments by the direct;step and reciprocal method of allocation.;Direct Method;Service Department;Operating Department;Personnel;IT;Family;Law;Corporate;Law;Total;Total costs after allocation;Step Method;Service Department;Operating Department;Personnel;IT;Family;Law;Corporate;Law;Total;Total costs after allocation;Reciprocal Method;Service Department;Operating Department;Personnel;IT;Family;Law;Corporate;Law;Total;Total costs after allocation

 

Paper#42015 | Written in 18-Jul-2015

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