A business uses the step-down method to allocate service department costs to the manufacturing departments. There are two service departments and two manufacturing departments, as shown here:

Plant administration costs are allocated based on labour hours, and custodial services costs are allocated based on space occupied. The total costs of the cutting and polishing departments (rounded to the closest 1,000), after allocating all the service department costs, starting with the largest service provider, are which of the following?
a. Cutting, $396,000; polishing, $914,000
b. Cutting, $405,000; polishing, $995,000
c. Cutting, $381,000; polishing, $889,000
d. Cutting, $394,000; polishing, $1,006,000
e. Cutting, $380,000; polishing, $892,000

Transcribed Image Text:

Manufacturing Departments Service Departments Plant Custodial Administration Services Cutting Polishing $90,000 $261,000 $689,000 18,000 Costs Labour hours Space occupied (m?) $360,000 25,000 6,000 30,000 45,000 5,000 1,000 10,000