7777 Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing(purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan hasthe following labor hours devoted by each of the service departments to the other departments.Total Labor Hours Used by DepartmentsSourcingOperationsSourcing10,000Operations20,000The costs incurred in the plant are as follows:DepartmentsSourcingOperationsAssemblyDepartmentalCosts$ 210,000280,000440,000285,000$ 1,215,000Assembly40,00060,000Finishing60,00050,000FinishingTotalRequired:1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcingdepartment that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method?2. What are the total costs in the production departments after allocation?(For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)Total ServiceDepartment CostAllocatedTotal ProductionCosta. Direct MethodAssemblyFinishingb. Step MethodAssemblyFinishingc. Reciprocal MethodAssemblyFinishing

The various methods for cost allocation are classified as direct, step and reciprocal method.Using…

Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Total Labor Hours Used by Departments Sourcing Operations Sourcing 10,000 Operations 20,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Departmental Costs $ 210,000 280,000 Assembly 40,000 60,000 Finishing 60,000 50,000 Finishing Total Required: 440,000 285,000 $ 1,215,000 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Direct Method Total Service Department Cost Allocated Total Production Cost