Dunne Corporation has three production departments: forming, assembly, and packaging. The maintenance department supports only the production departments; the computer services department supports all departments including maintenance. Other relevant information follows. 

Required

a. Allocate service department costs to operating departments, assuming that Dunne adopts the step method. The company uses the number of computers as the base for allocating the computer services costs and machine hours as the base for allocating the maintenance costs.

b. Use machine hours as the base for allocating maintenance department costs and the number of computers as the base for allocating computer services cost. Allocate service department costs to operating departments, assuming that Dunne adopts the direct method.

c. Compute the total allocated cost of service centers for each operating department using each allocation method. 

Transcribed Image Text:

Computer Forming Assembly Packaging Maintenance Services Machine hours Number of computers Annual cost* 6,000 14 2,500 20 1,500 11 400 15 $800,000 $450,000 *This is the annual operating cost before allocating service department costs. $250,000 $100,000 $90,000