School of Business and School of Education. Each of the operating departments uses the services of the companys two support departments: IT-Department and HR-Department. Additionally, the IT and HR departments use the services of each other. Data concerning the past year are as follows:
		Support Departments			Operating Department
		IT	HR		School of		School of
		Department	HR-Dept.		Business		Education	Total
Budgeted Overhead Cost before any				$437,500		$375,120	$825,250		$956,330		$2,594,200
departmental cost allocation
Support work furnished by IT-Dept.
Budgeted IT Salaries		0	$20,000		$80,000		$100,000	$200,000
Percentage		0	10.00%		40.00%		50.00%	100.00%
Support work furnished by HR-Dept.
Budgeted IT Service hours		1250	0		3,000		2,000	6,250
Percentage		20.00%	0		48.00%		32.00%	100.00%

Directions:

1. What are the total overhead costs of the operating departments (Business and Education) after the support-department costs of the IT Dept. and Human Resource Dept. have been allocated using (a) the direct method, (b) the step-down method (allocate IT Department first), (c) the step-down method (allocate Human Resource Department first), and (d) the reciprocal method?

2. Which method would you recommend the University of Florida use to allocate service-department costs? Why?