The Sawyer Company has two service departments and two production departments. The following data are available from last year.

The costs of Service Departments 1 and 2 are allocated on the basis of number of transactions and square feet occupied, respectively.

Required
A. Assuming that the Sawyer Company allocated service department costs by the direct method, how much overhead would be allocated from each service department to each producing department?
B. Assuming that the Sawyer Company allocated service department costs by the step-down method, starting with Service Department 1, how much overhead would be allocated from each service department to each producingdepartment?

Transcribed Image Text:

Production 1 Production 2 Department costs Number of transactions 10,000 Square feet occupied2,000 Service 1Service 2 $42,000 12,000 1,000 $200,000 14,000 3,000 100,000 16,000 2,000 $63,000