Munoz Information Services, Inc., has two service departments: human resources and billing. Munozs operating departments, organized according to the special industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows.

	Human Resources			Billing			Health Care			Retail			Legal Services
Number of employees		20			50			199			149			102
Annual cost*	$	900,000		$	2,510,000		$	6,090,000		$	4,890,000		$	2,890,000
Annual revenue							$	9,900,000		$	5,750,000		$	4,350,000

^*This is the operating cost before allocating service department costs. Required

1. Allocate service department costs to operating departments, assuming that Munoz adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating the billing department costs.

2. Allocate service department costs to operating departments, assuming that Munoz adopts the direct method. The company uses the number of employees as the base for allocating the human resources department costs and department annual revenue as the base for allocating the billing department costs.

3. Compute the total allocated cost of service centers for each operating department using each allocation method.