Exercise 4B-2 (Static) Step-Down Method [LO4-11]

Madison Park Co-op, a whole foods grocery and gift shop, has provided the following data to be used in its service department cost allocations:

	Service Departments				Operating Departments
	Administration		Janitorial	Groceries		Gifts
Departmental costs before allocations	$150,000		$40,000		$2,320,000		$950,000
Employee-hours	320		160		3,100		740
Space occupiedsquare feet	250		100		4,000		1,000

Required:

Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis of space occupied. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations.)

	Service Departments			Operating Departments
	Administration	Janitorial		Groceries	Gifts	Total
Departmental costs before allocations	$150,000	$40,000		$2,320,000	$950,000	$3,460,000
Allocations:
Administration costs
Janitorial costs	0
Total costs after allocations	$0	$40,000		$2,320,000	$950,000	$3,310,000

Please, post steps too.