Refer to the data given in the preceding problem. When Tampa Instrument Company established its service departments, the following long-run needs were anticipated.

Required: Use dual cost allocation in conjunction with each of the following methods to allocate Tampa Instrument Company’s service department costs: (1) direct method and (2) step-down method.

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User of Service HR Maintenance CAD Long-Run Service Needs (In hours of service) + Machining Assembly Total HR Provider of Service Maintenance CAD 500 1,000 800 3,500 4,800 4,800 5,000 2,400 1,200 10,000 8,000 6,000