Fender Musical Instruments has two production departments, acoustic guitars and electric guitars. In addition, there are two service departments, administration and materials processing. The company purchases a variety of component parts from which the departments assemble guitars for sale in domestic and international markets. The electric guitars division is highly automated. The manufacturing costs depend primarily on the number of subcomponents in each guitar. In contrast, the acoustic guitars division relies primarily on a large labor force to hand-assemble guitars. Its costs depend on direct-labor hours. The costs of administration depend primarily on the square footage occupied. The costs of materials processing depend primarily on the total number of components handled. Guitars M1 and M2 are produced in the acoustic guitars department, and E1 and E2 are produced in the electric guitar department. Data about these products follow:

	Direct- Materials Cost	Number of Components	Direct- Labor Hours
M1	$740	110	3.0
M2	860	90	6.0
E1	630	100	1.5
E2	910	200	1.0

Budget figures for 20X7 include the following:

	Administration	Materials Processing	Acoustic Guitar	Electric Guitar
Direct department costs (excluding direct materials cost)	$1,500,000	$1,200,000	$6,800,000	$5,480,000
Square footage occupied		5,000	50,000	25,000
Number of final guitars produced			8,000	10,000
Average number of components per guitar			100	160
Direct-labor hours			30,000	8,000

Required: (a) Allocate the costs of the service departments using the step-down method. (b) Using the results of number 1, compute the cost per direct-labor hour in the acoustic guitars department and the cost per component in the electric guitars department.