Use the step method to allocate the service departments cost to the production

departments and calculate total costs for each production department.

Question $5$

The following information is available for a local organisation:

Costs for service department A are allocated based on square footage, and costs for service

department B are allocated based on total labor hours.

Required:

a$.$ Using the direct method, allocate the service department costs to the production

departments and calculate total costs for each of the production departments.

b$.$ Using the step method, allocate the service department costs to the production

departments and calculate total costs for each of the production departments.