Kovacik manufactures two types of piggy banks in two different departments: a kangaroo-shaped piggy bank and a platypus-shaped piggy bank. The plant is highly automated and contains only two other departments: (1) engineering and design, and (2) information systems. Kovacik allocates support department costs according to estimated service use.

Required (a) Determine the estimated total allocated costs for the operating departments using the stepdown method. (b) Determine the estimated total allocated cost per unit of the kangaroo-shaped piggy bank and the platypus-shaped piggy bank under the step-down method.

Operating Support Engineering Information & design systems Kangaroo bank Platypus bank Direct costs $2,700 $8,000 $10,000 $20,000 Services used Engineering & design 10% 40% 50% Information systems 20% 30% 50% Production volume 8,000 4,000 Total allocated costs are assigned to individual units using the production volume