Exerclse $11-34($Algo$)$ Cost Allocation: Step Method $($LO $11-1)$

Memorial Services, Incorporated $($MSI$)$ has three service departments $($IT$,$ Accounting, and HR$)$ and two production departments $($West

and East$).$ The usage data for each of the service departments for the previous period follow:

The direct costs of the service departments in the previous period were $$88,000$ for IT$,$ $$104,000$ for Accounting. and $$125,000$ for HR$.$

Required:

Use the step method to allocate the service department costs to the two production departments. Allocate HR costs first, followed by

IT$,$ and then Accounting.

Note: Amounts to be deducted should be Indleated by a minus sign.