Renaissance School of Music and Art provides classes for school-age children. The students are enrolled in two departments: Music Education and Art Education. The school also has two service departments:

Administration and Human Resources (A&HR) and Maintenance (M). The budgeted costs in the two service departments are as follows:

Administration and Human Resources ................................................................................................................... $342,000 Maintenance ............................................................................................................................................................ 171,000 The usage of the service department’s output for the year is as follows:

Required: Allocate the two services departments’ costs to the Music Education and Art Education departments using each of the following allocation methods.
1. Direct method.
2. Step-down method (Since each service department serves one other service department, allocate the cost of A&HR first.)

Transcribed Image Text:

User of Service Administration & Human Resources Maintenance Music Education Art Education Administration & Human Resources Provider of Service Maintenance 5% 10% - 40% 40% 50% 55%