Question: Direct and Step-Down Allocations Longworth Manufacturing has two producing departments, machining and assembly, and two service departments, personnel and custodial. The company's budget for April 20X1 is as follows:
Longworth allocates personnel costs on the basis of number of employees and custodial costs on the basis of square feet.
1. Allocate personnel and custodial costs to the producing departments using the direct method.
2. Allocate personnel and custodial costs to the producing departments using the step-down method. Allocate personnel costs first.