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What order of allocation under step cost allocation method

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Reference no: EM132515610

Amber Company uses two producing departments (A and B) and two service departments (S1 and S2). The costs incurred in S1 and S2 are allocated to Departments A and B and included in their factory overhead rates for costing products. S1 costs are allocated based on the number of employees, S2 costs are allocated based on direct labor-hours, and the production departmental overhead rates are also based on direct labor-hours.

The following data are available for a recent period:

                                                      S1                       S2                             A                           B

Direct department costs       $24,000                $36,000               $70,000                 $117,500

Number of employees             1                             2                      16                           9

Direct labor hours                      225                    150                  1,125                  900

Question 1: What is the order of allocation under the step cost allocation method?

Reference no: EM132515610

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