[LO 7-3]

Departmental Cost Allocation Logan Products has two production departmentsassembly and finishing. These are supported by two service departmentssourcing (purchasing and handling of raw materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments.

	Total Labor Hours Used by Departments
	Sourcing	Operations	Assembly	Finishing
Sourcing		20,000	40,000	60,000
Operations	10,000		60,000	50,000

The costs incurred in the plant are as follows:

Departments	Departmental Costs
Sourcing	$165,000
Operations	205,000
Assembly	410,000
Finishing	255,000
Total	$1,035,000

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Required Use 4 or more decimal places (e.g., 33.3333%) in your calculations.

What are the costs allocated to the two production departments using (a) the direct method, (b) the step method (with the sourcing department going first), and (c) the reciprocal method?

What are the total costs in the production departments after allocation?