Reference no: EM132547269

Kim's Company has two service departments (Service 1 and Service 2) and two operating departments (Operating 1 and Operating 2). Service 1 costs of $3,500,000 are allocated on the basis of Service 1 Hours. Service 2 costs of $5,000,000 are allocated on the basis of Service 2 Hours. Ryan uses the step-down method of service department allocation, with Service 1 allocated first.

Usage of Service 1 and Service 2 hours are as follows:

                      Service 1 Hours                   Service 2 Hours

Service 1            -                                  2,000

Service 2              2,500                              -

Operating 1         1,500                             3,500

Operating 2              3,000                          4,500

Question a. How much total service department cost should be allocated to Operating 1?

Question b. How much total service department cost should be allocated to Operating 2?