Boomtown is preparing a cost analysis of three departments: Parks, Fire, and Water. To comply with accuracy standards in allocating indirect costs, Boomtown will employ the step-down method of cost allocation. There are two indirect cost groups that are allocated: City Administration and Facilities. Costs for facilities are allocated first, and then cost for city administration are allocated. Using the data in Table  Prepare the cost allocation using direct cost as the base and determine the full cost of the departments.

 

Indirect Cost Groups	Direct Cost	Base	Allocation	Subtotal	Base	Allocation	Subtotal
Facilities	$                  5,212,544
City Admin	$                  1,475,241
Departments
Parks	$               15,025,842				15.74%
Fire	$               45,218,534				47.35%
Water	$               35,248,612				36.91%
					100.00%

Answer rating: 100% (QA)

Solution To perform the cost allocation using the stepdown method we will first allocate the facilit... View the full answer