Question

Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $370,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $200,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $142,500 and $171,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:

Production

Support Departments

Departments

​	Warehouse Department	Data Center Department	Music	Books
Budgeted costs	$370,000	$200,000	$142,500	$171,000
Budgeted warehouse-hours	NA	590	1000	1600
Number of computer hours	250	NA	860	1010

Using the step-down method, what amount of Data Center Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round intermediary calculations to three decimal places.)

Choices:

$123,487

$108,021

$91,979

$144,992

Answer 1