Exercise 17-18 Step-Down Method of Service Department Cost Allocation; Bank (LO 17-1) Tuscaloosa National Bank...
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Exercise 17-18 Step-Down Method of Service Department Cost Allocation; Bank (LO 17-1)
Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments output for the year is as follows:
| User of Service | Provider of Service | ||||
| HR | Computing | ||||
| HR | 20 | % | |||
| Computing | 10 | % | |||
| Deposit | 70 | % | 50 | % | |
| Loan | 20 | % | 30 | % | |
The budgeted costs in the two service departments for the year are as follows:
| HR | $ | 465,000 | |
| Computing | 697,500 | ||
Required: Use the step-down method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. Tuscaloosa National Bank allocates the costs of the HR Department first. (Do not round intermediate calculations.)
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