Donaldson Company has two service departments (personnel and financial) that provide services for one another as well as for two production departments, assembly and finishing. Data for the month follow:

Personnel department costs were $86,000, and financial department costs were $41,000. Donaldson uses employees as the allocation base for personnel department costs and payroll costs for financial department costs.

REQUIRED
A. Allocate support costs using the direct method.
B. Allocate support costs using the step-down method, with personnel costs allocatedfirst.

Transcribed Image Text:

Personnel Financia Assembly Finishing 20 15 Employees 6 Payroll $15,000 $14,000 $30,000 $27,000