1. Johnson & Johnson allocates service department costs: Administration $3,000,000, Maintenance $2,500,000, allocated to Production and Sales.
   • Requirements:
     • Determine allocation rates using the step-down method.
     • Allocate costs to each operating department.
     • Prepare a cost allocation report.
     • Compare results with the direct and reciprocal methods.
     • Discuss the advantages and disadvantages of using the step-down method for cost allocation.