James Inc. is a computer software consulting company. Its three major function

James Inc. is a computer software consulting company. Its three major functional areas are computer programming information
systems consulting and software training. Kathy Coward a pricing analyst in the Accounting Department has been asked to develop total costs for the
functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs Coward is considering three different methods of
allocating overhead costs-the direct method the step method and the reciprocal method. Coward assembled the following data on overhead from its two service
departments the Information Systems Department and the Facilities Department.

Service Dept User Depts

Info Computer

Systems Facilities Program Consult Training Total

Budgeted OH $50000 $25000 75000 110000 85000 $345000

Info Systems(hrs) 400 1100 600 900 3000

Facilites (sq ft) 200000 400000 600000 800000 2000000

Information systems is allocated on the basis of hours of computer usage; facilities are allocated
on the basis of floor space. Required: Allocate the service department costs to the user departments using the step method. Allocate
Information Systems first and round to the nearest dollar. Provide total user department costs.