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Elrod Electronics is a manufacturer of data storage devices. Elrod consists of two service departments, maintenance and computing, and two production departments, assembly and testing. Maintenance costs are allocated on the basis of square footage occupied, and computing costs are allocated on the basis of the number of computer terminals. The following data relate to allocations of service department costs:

Maintenance Computing Assembly Testing
Service department costs $600,000 $900,000
Square footage 20,000 30,000 90,000 60,000
Terminals 10 30 20 60

How much service department costs will be allocated to the testing department using the direct method?

 

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