Salvador Apparel Company in Barcelona, Spain, has three production departments and two service departments. The overhead-per-month analysis sheet provides the following totals of the overheads analyzed to production and service departments:

Departments Overheads Mens wear production department 48,000 Womens wear production department 42,000 Childrens wear production department 30,000 Marketing service department 14,040 Delivery service department 18,000 152,040

The expenses of the service departments are apportioned as follows:

Production departments Service departments Mens Womens Childrens Marketing Delivery Marketing 20% 40% 30% 10% Delivery 40% 20% 20% 20%

Instruction

Use following methods to allocate service departments costs:

1. Direct allocation 2. Step-down allocation 3. Reciprocal allocation