BluStar Company has two service departments, Administration andAccounting, and two operating departments, Domestic andInternational. Administration costs are allocated on the basis ofemployees, and Accounting costs are allocated on the basis ofnumber of transactions. A summary of BluStar operationsfollows:
| Administration | Accounting | Domestic | International |
| Employees | | – | | | 21 | | | 44 | | | 35 | |
| Transactions | | 34,000 | | | – | | | 19,000 | | | 76,000 | |
| Department direct costs | $ | 359,000 | | $ | 144,000 | | $ | 935,000 | | $ | 3,780,000 | |
|
Required:
a. Allocate the cost of the service departmentsto the operating departments using the direct method. (Donot round intermediate calculations. Negative amounts should beindicated by a minus sign.)
b. Allocate the cost of the service departmentsto the operating departments using the step method. Start withAdministration. (Do not round intermediate calculations.Negative amounts should be indicated by a minus sign.)
c. Allocate the cost of the service departmentsto the operating departments using the reciprocal method.(Do not round intermediate calculations. Negative amountsshould be indicated by a minus sign.)
