Question: Garza Corporation has three production departments:
Garza Corporation has three production departments: forming, assembly, and packaging. The maintenance department supports only the production departments; the computer services department supports all departments, including maintenance. Other relevant information follows.
Required
1. Allocate service department costs to operating departments, assuming that Garza adopts the step method. The company uses the number of computers as the base for allocating the computer services costs and machine hours as the base for allocating the maintenance costs.
2. Use machine hours as the base for allocating maintenance department costs and the number of computers as the base for allocating computer services cost. Allocate service department costs to operating departments, assuming that Garza adopts the direct method.
3. Compute the total allocated cost of service centers for each operating department using each allocation method.
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