KG Company has two service departments, C1 and C2, and three production departments, D1, D2, and D3. Data for a recent month follow:

Service provided to: C1. C2. D1. D2. D3. C1 .20 .20 .40 .30

C2 .30 .20 .40 .10

Costs 200000 100.000 600,000 800,000 1,000,000

a. Determine the allocations to the departments when the step method is used. Allocate C1 first. b. Briefly describe why the reciprocal may be preferable to the direct or step methods of allocation.