Marin Company produces two software products (Cloud-X and Cloud-Y) in two separate departments (A and B). These products are highly regarded network maintenance programs. Cloud-X is used for small networks and Cloud-Y is used for large networks. Marin is known for the quality of its products and its ability to meet dates promised for software upgrades.

Department A produces Cloud-X, and department B produces Cloud-Y. The production departments are supported by two support departments, systems design and programming services. The sources and uses of the support department time are summarized as follows:

1. Determine the total support costs allocated to each of the producing departments using (a) the direct method, (b) the step method (design department goes first), and (c) the reciprocal method.

 

Total Labor From Design Design Programming 5,000 Department A Department B Hours 400 1,000 600 9,000 15,000 1,000 2,000 Programming The costs in the two service departments are as follows: Labor and materials (all variable) Depreciation and other fixed costs Total Design $ 56,000 43,600 $ 99,600 Programming $ 39,600 4,000 $ 43,600