Wakowski Companys annual budget for its three support (non-revenue producing) departments (Administration, legal, and Engineering) and two production (revenue producing) departments (Processing and Finishing) is as follows:

Using the order listed, determine how much costs should be allocated to each revenue producing (production) department using

1. The direct method
2. The stepdown method
3. How was the order of allocation determined? Does the order make a difference?
4. Which would you recommend?

Administration $2,130 80 Legal $1,680 40 Annual Budget Engineering Processing $2,370 $7,520 60 400 Finishing $7,200 300 Total $20,900 880 Direct Costs Number of Employees Cases Engineering hours 600 800 30 400 30 1,600 136 2,000 204 5,400 440 40