Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow:

Proportion of Services Used by Department

Direct Costs Maintenance Cafeteria Machining Assembly

Machining $ 130,000

Assembly 82,000

Maintenance 50,000 0.1 0.5 0.4

Cafeteria 42,000 0.7 0.1 0.2

Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Maintenance.

b. The allocations are made in the reverse order (starting with Cafeteria).