A professional service company has two operating departments: LTD and WSD. Each of the operating departments uses the services of the company’s two support departments: Legal and Personnel. Additionally, the Legal and Personnel departments use the services of each other. Data concerning the past year are as follows: Support Departments Operating Departments Legal Personnel LTD WSD BUDGETED USAGE Legal (hours) 250 1,500 750 Personnel (hours) 2,500 22,500 25,000 Budgeted overhead costs before any cost allocations $720,000 $500,000 $82,000 $76,000 How much are the total overhead costs of the operating departments (LTD and WSD) after the support-department costs of Legal and Personnel has been allocated using

(i) the direct method 

(ii) the step-down method (following the sequence of the percentage of service provided)

(iii) the reciprocal method?

Answer rating: 100% (QA)

Working notes i Direct method Support Department Legal 720000 Operating Department Personnel LTD WSD ... View the full answer