BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows.

	Administration			Accounting			Domestic			International
Employees					27			41			32
Transactions		31,000						22,000			88,000
Department direct costs	$	355,000		$	147,000		$	955,000		$	3,760,000

Required:

a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departments using the reciprocal method.

To From Administration Accounting Domestic International Department costs Administration allocation Accounting allocation Total cost