27. Hreck, Inc. has two service departments (Human Resources and Building Mainte

Question

27.

Hreck, Inc. has two service departments (Human Resources and Building Maintenance) and two production departments (Machining and Assembly). The company allocates Building Maintenance cost on the basis of square footage and allocates Building Maintenance first in step-down method. The square footage occupied by each department follows.
    

Assuming use of the direct method, over how many square feet would the Building Maintenance cost be allocated (i.e., spread)?

Multiple Choice

70,000.

More information is needed to judge.

50,000.

58,000.

20,000.

Explanation / Answer

Answer is 4

58000 square feet

58000 = 21000+29000+8000

In step down method cost are allocated to rest of service department and to production department

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