Allocation: Direct Method and Step down Method Please show work Required: 1) Allocate the personnel and engineering costs...

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Direct Method	Personnel	Engineering	Processing	Assembly	Total
Direct Costs	64,000.00	140,000.00	1,200,000.00	1,600,000.00	3,004,000.00
Square Feet	4,000.00	2,000.00	20,000.00	50,000.00	76,000.00
No. of employees	30.00	60.00	400.00	500.00	990.00
Allocation
Personnel cost (400:500)	(64,000.00)	-	28,444.44	35,555.56	-
Engineering cost (20000:50000)	-	(140,000.00)	40,000.00	100,000.00	-
Total costs	-	-	1,268,444.44	1,735,555.56	3,004,000.00

Step Down Method	Personnel	Engineering	Processing	Assembly	Total
Direct Costs	64,000.00	140,000.00	1,200,000.00	1,600,000.00	3,004,000.00
Square Feet	4,000.00	2,000.00	20,000.00	50,000.00	76,000.00
No. of employees	30.00	60.00	400.00	500.00	990.00
Allocation
Engineering cost (4000:20000:50000)	7,567.57	(140,000.00)	37,837.84	94,594.59	-
Total	71,567.57	-	1,237,837.84	1,694,594.59	3,004,000.00
Personnel cost (400:500)	(71,567.57)	-	31,807.81	39,759.76	-
Total costs	-	-	1,269,645.65	1,734,354.35	3,004,000.00

Note: As per step down method, service department which has more costs will be allocated first so Engineering department is allocated first.

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