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only Direct Mthod and Step Method

7.37 Computer Intelligence, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Carol Bingham, a pricing analyst in the accounting department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Carol is considering three different methods of the departmental allocation approach to allocate overhead costs: the direct method, the step method, and the reciprocal method. She assembled the following data from the two service departments, information systems and facilities: C Service Departments Production Departments Information Facilities Maintenance Computer Information Software systems Programming Systems Training Consulting Budgeted $80,000 $45,000 S60,000 $150,000 $190,000 $135.000 overhead Information 120 240 160 1,200 600 1.000 systems (hours)* Facilities 200 260 180 400 700 800 (square feet) Time logged 50 150 100 250 280 140 (hours)*** Allocated on the basis of hours of computer usage. ** Allocated on the basis of floor space. *** Allocated on the basis of time logged for maintenance Required: Find total overhead cost assigned to production departments when overhead applies from these service departments to the production departments, using these three methods. 1. Direct method. 2. Step method. 3. Reciprocal method

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