Macho Company Has Two Service Departments, Maintenance and Cafeteria, as Well

Essay

Macho Company has two service departments, Maintenance and Cafeteria, as well as two production departments, Mixing and Finishing. Maintenance Department costs are allocated based on direct- labor hours and Cafeteria Department costs are allocated based on number of employees. The following information is also available: $\begin{array}{lllll}\text { Maintenance } & & \text { Cafeteria } & \text { Mixing } & \text { Finishing } \\\text { Direct dept.costs } & \$ 3,500 & \$ 2,800 & \$ 1,200 & \$ 400 \\\text { Direct-lab or hours } & 180 & 150 & 120 & 80 \\\text { Number of employees } &36 & 30 & 24 & 19\end{array}$ Required:
Assuming the step- down method of allocating costs and the Maintenance Department renders the greatest service, determine the amount of each service department's costs that will be allocated to each production department.