Problem 4-26A (Algo) Allocating service center costs-step method and direct method LO 4-6 Perez Information Services, Inc., has two service departments: human resources and billing. Perez's 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 Number of employees 20 Annual cost* $900,000 Billing $2,710,000 Health Care Retail Legal Services 50 200 150 100 Annual revenue $ 6,100,000 $10,000,000 $4,900,000 $5,700,000 $2,900,000 $4,300,000 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Perez 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. b. Allocate service department costs to operating departments, assuming that Perez 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. c. Compute the total allocated cost of service centers for each operating department using each allocation method.