Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of raw materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments.

The costs incurred in the plant are as follows:
Departments Departmental Costs
Sourcing.............................$165000
Operations............................205000
Assembly.............................410000
Finishing...............................255000
Total.................................1035000
Required
Use 4 or more decimal places (e.g., 33.3333%) in your calculations.
1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method (with the sourcing department going first), and (c) the reciprocal method?
2. What are the total costs in the production departments after allocation?

Transcribed Image Text:

Total Labor Hours Used by Departments Sourcing Operations Assembly Finishing 20,000 60,000 Sourcing Operations 10,000 60,000 40,000 50000