First State Bank has two revenue-producing departments, demand deposits and loans. The bank also has three service areas, administration, personnel, and accounting. The direct costs per month and the interdepartmental service relationships are reflected below. The bank allocates costs in the following order:

1. Administration 2. Personnel 3. Accounting

\section*{Required}
A. Compute the total cost for each revenue-producing department using the step-down method.
B. Define the algebraic equations reflecting the reciprocal service cost functions for the personnel, administration, and accounting departments.

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Percent of Service Used By Direct Department Costs Administration Personnel Accounting Deposits Loans Administration Personnel Accounting $40.000 60.000 60.000 10 10 30 50 10 10 10 20 40 30 10 40 40 Demand deposits 50.000 Loans 80,000