Cost Allocations: Direct Method Warren Ltd. has two production departments, Building A and Building B, and two service depart- ments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of June follow:

Required Compute the allocation of service department costs to producing departments using the direct method.

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Department Building A Building B Maintenance Cafeteria. Direct Costs Maintenance $495,000 322,000 Proportion of Services Used by Cafeteria Building A Building B 0.2 0.5 0.1 00 0.3 0.1 200,000 160,000 0.8 - 21