Brazil, Inc., has three service departments that support the production area. Outlined here is the budgeted support-service spending by department for the coming year.

Support-Service Departments Budgeted Spending Number of Employees ve CCIVIING Cetera nce visa d corer ee eit yecex neointima ition $25,000 2 RSTO US. Sees 2 aa es ie ee ae A RS er An 88) Nee 35,000 a UOC hess; HBOS 8.2 Ok 8,e am Re ae te epee BLA 8 Ha aa 10,000 1 Production Departments ASSmEn lyp ast ome Tinie wee. dhe Aad ect bores are f deejae 25 SO LENIE EE ties deere enre Sent 48 SOT ars GT Titel &. 12 The repair department supports the most support-service departments, followed by the tool department.

Service costs are allocated to departments based on the number of employees.

Required

a. Using the direct method of cost allocation, determine the amounts of support-service cost that will be allocated to each department.

b. Using the step method of cost allocation, determine the amounts of support-service cost that will be allocated to each department.

c. Do you believe that the method of cost allocation would matter to the support-service departments?

To the production departments? Why?