Question: The Danville Manufacturing Company has two service departments and two producing departments. The following data are available for 2006. Service Service Producing Producing Dept. 1 Dept. 2 1 2 Department Costs $12,000 $8,000 $60,000 $70,000 Number of Transactions 6,000 4,000 6,000 14,000 Square Feet Occupied 2,000 1,000 4,000 6,000 The costs of service departments 1 and 2 are allocated on the basis of number of transactions and square feet occupied, respectively. Refer to the Danville Manufacturing information above. Assuming that Danville Manufacturing Company allocates service department 1 costs first, the amount of service department 2 costs allocated to producing 1 under the step-down method would be:
$3,200
$4,000
$3,000
$2,400