Problem 17-25 Dual Allocation of Service Department Costs (LO 17-1, 17-2) Tampa Instrument Company manufactures gauges for construction machinery. The company has two production departments: Machining and Assembly. There are three service departments: Maintenance, Human Resources (HR), and Computer Aided Design (CAD). The usage of these service departments output during the year just completed is as follows:

Provision of Service Output (in hours of service)
		Provider of Service
User of Service	HR				Maintenance				CAD
HR
Maintenance		500
CAD		500				500
Machining		4,000				2,500				3,500
Assembly		5,000				4,000				1,500
Total		10,000				7,000				5,000

The budgeted costs in Tampa Instrument Companys service departments during the year are as follows:

	HR				Maintenance				CAD
Variable	$	60,000			$	88,000			$	60,000
Fixed		270,000				165,700				410,000
Total	$	330,000			$	253,700			$	470,000

When Tampa Instrument Company established its service departments, the following long-run needs were anticipated.

Long-Run Service Needs (in hours of service)
		Provider of Service
User of Service	HR				Maintenance				CAD
HR
Maintenance		500
CAD		2,000				500
Machining		3,000				3,500				4,000
Assembly		4,500				3,000				1,000
Total		10,000				7,000				5,000

Required: Use dual cost allocation in conjunction with each of the following methods to allocate Tampa Instrument Companys service department costs: (1) direct method and (2) step-down method.

Problem 17-25 Part 1

1. Direct method combined with dual allocation. a. Variable costs b. Fixed costs c. Total costs allocated

a. Variable costs:

Production Departments
Provider of Service	Machining	Assembly
HR	$26,667	$33,333
Maintenance	33,846	54,154
CAD	42,000	18,000
Total variable cost	$102,513	$105,487

Direct method combined with dual allocation for fixed costs. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

b. Fixed costs:

	Production Departments
Provider of Service	Machining	Assembly
HR
Maintenance
CAD
Total fixed cost

Direct method combined with dual allocation for total costs allocated. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

c. Total costs allocated

	Machining	Assembly
Variable costs
Fixed costs
Total costs