State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows:
Required:
a. Assume that the bank elects to distribute service department costs to production departments using the direct method. What amount of Communications Department costs is allocated to the Deposits Department?
b. Assume the same method of allocation as in requirement (a). What amount of Administration Department costs is allocated to the Loans Department?
c. Assuming that the bank elects to distribute service department costs to other departments using the step method (starting with Facilities and then Communications), what amount of Facilities Department costs is allocated to the Communications Department?
d. Assume the same method of allocation as in requirement (c). What amount of Communication Department costs is allocated to Facilities?
Direct costs Employee-hours Number of employees Square footage occupied Administration Communications $200,000 $300,000 24,800 33,600 15 4,900 13,440 Facilities Deposits Loans $254,000 $8,000,000 $5,000,000 21,600 450,000 350,000 210 150 5,600 246,400 201,600