Reference no: EM132794566

Airport Fashion Outlet allocates the personnel and payroll department costs to the sales departments of Shoes, Bags, and Clothing. Human resources (personnel) and payroll also provide services to each other. Personnel costs are allocated by number of employees and payroll costs are allocated by gross payroll.

Costs and other information for January were as follows:

                                         Personnel                Payroll             Shoes                 Bags                 Clothing
Current costs               $13,800                 $6,400                 $24,400       $40,000         $31,500
Gross payroll                 $3,000                 $1,500             $5,600             $8,700         $4,050
Number of employees          5                          3                     8                15                   4

Problem 1: Create a schedule, which includes the total cost of operating the sales departments for January. Allocate service costs using the step-down method starting with the payroll department first.