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CoursHeroTranscribedText: Prohlem 7-39 De arlrhental oust Allocation Data Performance. a computer software consulting company. has three major functional areas: computer programming. information systems consulting, and software training. Carol Bingham, a pn'cing analyst, 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 tierent methods of the departmental allocation approach to allollte overhead costs: the direct method. the Step method. and tl'ie reciprocal method. She assembled the following data from the two service departments, Informatlon systems and facilltles. E Service Departments Production Departments Computer Info. Systems software Info. Systems Facilities programming consulting training Total Budgeted ova-mead $00,000 $40,000 $100,000 $190,000 $125,000 $595,000 Info. Systems [hours)* 600 1,200 300 900 3,000 Facllllies (sq ft)" 240 900 600 600 2,400 " Allocated on the basis of hours of computer usage. "" Allocated on the basis of oor space. ulred: Usettor more decimal laces e. ., 33.333396 in ur calculations. 1. Using as the allocation base computer usage time for the information systems department and square feet of oor space for the facilities department, apply overhead mom these service departments to the production departments, using these three methods. HeeEitee-l-endSoluertode-termmeHieeliooatiom: a. Direct method to. Step method c. Reciprocal method 2. Rather than allocate costs based on computer and oor space usage, honr might Data Performance better assign the information systems department's costs

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