Step Down Method

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi Hope you can help i am a bit stuck on the step down method, if it is asking you to re-apportion using the step down method would you just reappotion equally to the service centres/ production cost centres that you have.

Thankyou for your help.

Zoe

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Step Down Method

    If you have 2 service centres the step down method would mean you re-apportion service centre 1 to the production centres AND the other service centre using an appropriate basis. Then totalling the second service centre and re-apportioning the new total to the production centres again using an appropriate basis.

    I'll have a look for a past exam question as an example

    sandy.hood@chichester.ac.uk

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Step Down Method

    This links to Dec 2004

    http://www.aat.co.uk/other_files/pep/Dec 2004 - Intermediate for web/ECR Dec 04 questions.pdf

    on page 7 the question says:
    Overheads are allocated and apportioned between centres on the most appropriate basis. The
    total canteen overheads are reapportioned to the other three centres based on the number of
    employees. Maintenance centre overheads are then reapportioned to the moulding and glazing
    centres. The maintenance records show that 20% of time is spent in the moulding centre and
    80% in the glazing centre.

    This an example of step down
      Step ONE re-apportion canteen overheads
      Step TWO re-apportion maintenance centre overheads

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