Step-down Method

Sam22

Hi,

Can anyone help me understand how the step-down method works for re-apportionment? I'm really not understanding it.

Thank you!

SandyHood

Look at Premier Labels Ltd on the hand out attached

Attachment not found.

1. Look at the layout on page 3, see the blue steps at the bottom
2. You take your Total of primary apportionments values in this order:

1. Equipment Maintenance - allocate total of primary apportionments equally to the other three departments
2. Stores - allocate total you get when you add total of primary apportionments and the store's share of the equipment maintenance - according to the number of material requisitions.

In other words the reapportioned overheads "step down" when the equipment maintenance reapportions include stores and this value is included in the stores total overhead that is reapportioned to Plastics Moulding and to Labelling.

Sam22

Thank you.
This was really helpful.