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Sequential questions in accounting

25/03/2021 Client: saad24vbs Deadline: 10 Days

Week 14: Exercise 2 (Step-Method)

See Exhibit 2 for a diagram of the flow of costs and the sequence in which costs are allocated.

Note: The sequence in which the departments are raked is important. This is because, with the Step-

Method, the costs of a support department are never allocated to a support department above in the

sequence.

What this table shows is there are two Support Departments:

1. Power Department

 Provides power in terms of ‘Kilowatt-hours’

 Incurred total costs of $250,000

 Used 1,000 hours of maintenance time

 Used zero Kilowatt-hours of power

2. Maintenance Department:

 Provides maintenance services in terms if ‘Maintenance hours’

 Incurred total costs of $160,000

 Used zero hours of maintenance time

 Used 200,000 Kilowatt-hours of power

There are two Producing Departments:

1. Grinding Department

 Used 600,000 Kilowatt-hours of power

 Used 4,500 hours of maintenance time

2. Assembly Department

 Used 200,000 Kilowatt-hours of power

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