Fabricating and Finishing are two production departments of Michael Manufacturing. Building Operations and Information Services are support departments. “Building Operations” provides services to both support and production departments. YOU ARE THE MANAGER OF THE FABRICATING DEPARTMENT! “Information Services” does NOT provide any services for non-production areas of the company.
The company employs departmental overhead rates and both producing departments use machine hours to allocate their overhead. Square footage is used to allocate building operations, while computer time is used to allocate information services.
The budgeted and actual cost data of the support departments, departmental overhead and other relevant operating data are as follows:

1. The company is using the Direct Method to allocate support costs. Under this method, how much Building Operations cost will be allocated to Information Services?

2. Michael mentions to Paul that they could really benefit from using the most accurate method, known as the "Reciprocal" or "Algebraic" method. Could Michael benefit from using this method? Yes or No and WHY?

3. Liza suggests that the Step Method be used. Under this method, what will be the POHR that will be used in your Fabricating department for product costing during the year (per machine hour)?

4. Your Building Operations department is a cost center. Thus, at the end of the year you will receive a responsibility-accounting based report comparing your budgeted direct costs and support costs and comparing these to the actual.

5. Based on your computations above, how much total cost will your Building Operations department be held accountable for (charged with) for performance evaluation purposes?