Eidaudi Inc. is organized into two major sales divisions: Institutional clients and Retail clients. EidaudiInc. also has two service departments: Finance and Administration. The Finance department's costs are allocated to the other departments based on a log of the hours spent on tasks for each user. The Administration department's costs are allocated to users based on the number of employees in each department. The following information is available for the most recent period: Finance Administration Institutional Retail Overhead costs$450,000$200,000$700,000$1,000,000

Research hours50250600800

Number of employees12152030Required:

a)Allocate the service department costs to the Institutional and Retail divisions using the direct method.

b)Assume that the step method is used and the Finance department is the first one to be allocated. Allocate the service department costs to the Institutional and Retail divisions

c)Assume that the reciprocal method is used. Write the reciprocal cost equations.