) Salerno Company has two service departments, Maintenance and Cafeteria, as well as two production departments, Mixing and Bottling. Maintenance Department costs are allocated based on square footage and Cafeteria Department costs are allocated based on number of employees. The following data was available:
Maintenance Cafeteria Mixing Bottling
Direct costs $200,000 $120,000 $76,000 $85,000
Square footage 1,000 2,000 4,000 6,000
Number of employees 30 20 60 100
Direct labor hours 8,000 6,000
A) Determine the total costs after allocating the service departments' costs to producing departments using the direct method.
B) Determine the total costs after allocating the service departments' costs to producing departments using the step-down method.