computer information service

Problem 2
Computer Information Services is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. XXXXX XXXXX, 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, Birch is considering three different methods of allocating overhead costs: The direct method, the step method, and the reciprocal method. Birch assembled the following data on overhead from its two service departments, the Information Systems Department and Facilities Department.

Service Departments
Info User Departments
Info
Systems Facilities Program Consult Training Total
Budgeted Overhead $ 50,000.00 $ 25,000.00 $ 75,000.00 $ 110,000.00 $ 85,000.00 $ 345,000.00
Info System (hrs) 400 1,100 600 900 3,000
Facilities (Sq ft) 200,000 400,000 600,000 800,000 2,000,000

Information systems is allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space.

Required:
Allocate the service department costs to the user departments using the step method. Allocate Information Systems first and round to the nearest dollar. Provide total user department costs.