Question: XYZ has two service departments: IT and HR; and two operating departments: cutting and assembly. For the information given what are the total operating department costs after using step-down method of allocating service department costs using the preferred sequence for optimal decision support.
Department Total Cost IT Hours used # of employees
IT $2,600 ---- 50
HR 1,400 3,000 ----
Cutting 10,500 6,000 60
Assembly 7,500 3,000 100