Lucerne Company has 15 production departments and produces hundreds of products. Service department costs are allocated to production departments using the direct method. Five service departments provide the following services to the production departments.

1. The Computer Technology department provides computer support.

2. The Personnel department posts job openings, hires employees, and coordinates employee benefits.

3. The Accounting department processes accounting data, provides financial reports, and performs general accounting duties.

4. The Maintenance department maintains buildings and equipment.

5. The Legal department provides legal services.

Required:

a. For each service department, provide a possible allocation base. Explain why the base you chose for each service department is reasonable.

b. Does the direct method provide for allocations from one service department to another? Explain.