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Bay State Community College enrolls students in two departments, Liberal Arts and Sciences. The col- lege also has two service departments, the Library and the
Bay State Community College enrolls students in two departments, Liberal Arts and Sciences. The col- lege also has two service departments, the Library and the Computing Services Department. The usage of these two service departments' output for the year is as follows: User of Service Library.... Computing Services Liberal Arts.... Provider of Service Library Computing Services 20% 60% 40% Sciences... The budgeted costs in the two service departments for the year are as follows: 30% 50% Ubrary.... Computing Services.. $900,000 360,000 Required: Use the direct method to allocate the budgeted costs of the Library and Computing Services Department to the college's Liberal Arts and Sciences departments. In the question Liberal Art and Sciences are production departments which serves to students directly. Library and Computing services are service departments which serves to production departments. You will allocate service departments' cost by using direct method (second allocation). Percentages will be used as the amount of cost drivers
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