Macy Manufacturing Corporation has two service departments, Custodial Services and Maintenance, and three production (operating) departments, Cutting, Milling, and Assembly. The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow: Service Departments Operating Departments Custodial Maintenance Cutting Milling Assembly Budgeted costs before allocation $24,000 $12,000 $120,000 $75,000 $135,000 Square feet 2,000 20,000 10,000 44,000 26,000 Labor-hours 4,000 8,000 8,000 Required: a. How much service department costs are allocated to each of the production departments if the direct method is used? b. How much service department costs are allocated to each of the production departments if the step-down method is used, allocating Custodial Services first? c. What is the effect of selection of the direct or step method on total overhead cost?