1. 3- Step-Down Method (start with personnel department)

Question One Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Production Support Departments Departments Maintenance Personnel A B Department Department Budgeted costs $300,000 $100,000 $160,000 $240,000 Budgeted maintenance- 1000 400 600 hours Number of employees 200 400 400 Required: Allocate the cost of support departments to production departments using 1. Direct Method 2. Step-Down Method (start with maintenance department)