Jimmy Corporation has two operating departments (Machining and Finishing) and two service departments (Payroll and Maintenance). Payroll services are allocated based on payroll expenses and maintenance services are allocated base on the area (square footage). The following information has been provided:

	Payroll	Maintenance	Machining	Finishing
Department costs	$ 120,000	$ 600,000	--	--
Payroll expenses	--	20,000	55,000	25,000
Square feet	2,000	--	32,000	16,000

Required: Determine the overhead rate for the three production areas. Allocate the service department costs to the revenue areas using the direct method.

Required: Determine the total cost for the three revenue areas. Allocate the service department costs to the revenue areas using the step method, starting with Payroll.

Required: Determine the total cost for the three revenue areas. Allocate the service department costs to the revenue areas using the reciprocal method.