Longworth Manufacturing has two producing departments, machining and assembly, and two service departments, personnel and custodial. The company’s budget for April 20X1 is as follows:

Longworth allocates personnel costs on the basis of number of employees and custodial costs on the basis of square feet.

1. Allocate personnel and custodial costs to the producing departments using the direct method.

2. Allocate personnel and custodial costs to the producing departments using the step-down method. Allocate personnel costs first.

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Service Departments Personnel Production Departments Custodial $70,000 1,000 30 Machining Direct department costs Square feet Number of employees 45,000 2,000 15 S600,000 10,000 200 Assembly 800,00 25.x 250