Step Down Method
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<BR>Does anyone have a straight forward explanation of the step down method (preferbly one thats memorable). I can't seem to get my head around it.<BR><BR>Many thanks.
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Step Down Method
Just remember, always start the apportionment with the Service Department who supplies a service, but who doesn't receive one. The next step down is done in the same way and so, leaving you eventually with the Production Departments.<BR><BR>Hope this helps0 -
Step Down Method
What you need to remember is once the cost centres have been apportioned and you need to second apportion them read the question, which has to tell you on what cost centre you are apportioning to and what the aportionment is, you then take away the total for that cost centre i.e. canteen so that it has a value of zero and apportion it to the other cost centres on the basis they have given you.<BR><BR>If you have a look at past exam papers you will see it will put in brackets the cost centres you need to apportion.<BR><BR>I hope this helps, i know it sunds confusing but there is a lot to get your head around.0 -
Step Down Method
Werthers, I think you are talking about step-down-method not re-apportionment of service cost centre like maintenance and canteen to production departments etc.<BR>Step-down-mothed is easy calculated when Fixed and variable cost are not seperated (Total Cost)<BR>Using the High/Low Method -<BR> Unit Cost (£)<BR> High 2000 10,000<BR> Low 1500 8,000<BR> Difference 500 2,000<BR> <BR> Variable cost per unit = 2,000/500<BR> = £4.00 per unit<BR> <BR><BR> Now you can find fixed cost = £<BR> Total cost 10,000<BR> Less variable cost (2000 x £4) 8,000<BR> Fixed Cost 2,000<BR><BR><BR> check your answer -<BR> Total cost 8,000<BR> Variable cost (1500 x £4) 6,000<BR> Fixed cost 2,000<BR><BR> Remember, fixed cost is constant.<BR><BR> Goodluck, Igho<BR>0