Reference no: EM132579590

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

Question 1: Assume the direct method is used to allocate service department costs to producing departments.