Allocating overhead. Meridian Company has two production departments and a maintenance department. In addition, the company keeps other costs for the general plant in a separate account. The estimated cost data for Year I follow:

The general plant services the three departments in the following proportions: 50 percent (Department 1): 30 percent (Department 2); 20 percent (Maintenance). Allocate maintenance costs based on maintenance hours.
Allocate maintenance department and general plant costs to the production departments.
Use the step method, starting with general plant costs.

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Cost Direct Labor ..... $100,000 Production Dept. 1 Production $ 60,000 General Dept. 2 Maintenance Plant Indirect Labor. 56,000 28,000 $45,000 $40,000 Indirect Materials Miscellaneous Maintenance 18.000 14.000 1.800 16.000 6,000 10,000 3.200 10,000 $180,000 $112,000 $50,000 $66.000 14.000 Hours 26,000 Hours.