Exercise 3 The company has two service departments, Cleaning and IT. Cleaning Department costs of $350,000 are allocated on the basis of budgeted cleaning-hours. IT Department costs of $150,000 are allocated based on the number of computer log-on hours. The costs of operating departments Assembly and Painitng are $250,000 and $300,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: File s 485 H 92 KI 244 H 24.8 Cleaning $350,000 IT Assembly 12.5 Painting $150,000 500 $250,000 1000 $300,000 1500 126 H 800 1000 #FFFF Budgeted costs Budgeted cleaning hours Number of computer 200 hour 144 H Using step-down method reapportion service department costs to production departments 11 KL