The Woodridge Manufacturing Company has two Production Departments: Cutting and Pasting. Each of these two departments uses the services provided by the Computing and Maintenance Departments, which both support the production functions and each others functions as well. Woodridge uses the step method of allocating these service department costs to the production departments. Computing is allocated on the basis of hours of department operations and Maintenance is allocated on the basis of departmental direct labor hours. Last period the following costs were recorded:

Cutting Department overhead	$400,000
Pasting Department overhead	$600,000
Computing Department total costs	$700,000
Maintenance Department total costs	$300,000

Production Department data:

	Cutting	Pasting	Computing	Maintenance
Hours of operation	5,000	7,500	15,000	2,500
Direct labor hours recorded	4,000	8,000	4,000	8,000

Required:

a. Determine the amount of Maintenance costs allocated to the Cutting and Pasting Departments using the step method of allocating service department costs.

b. Determine the amount of Computing costs allocated to the Cutting and Pasting Departments using the step method of allocating service department costs.

c. Determine the total overhead costs of the Cutting and Pasting Departments when this method of allocating service department costs is used.

Hint: Allocation should begin with the service department that provided the highest percentage of total services to other service departments.