*Refer to Figure 4-10 HR and Maintenance are ignored in the distribution of Power cost, even though it provides energy

to them.

The
direct distribution method ignores the extent to which one service department renders service to another department. Instead the service department’s
costs are allocated directly and only to the production department. This method has the advantage of simplicity, but produced less accurate results than
other methods. Use of the direct method is justified if the percentage of the cost allocated to the production departments does not differ materially
from what would be allocated using another, more precise method.

*Refer to Figure 4-11Even though Maintenance and HR provide service to Power, once Power has been fully allocated no reciprocal services are allocated
back to it.(Using the reciprocal method, a series of simultaneous equation would be sued to allocate a portion of Maintenance and HR cost back to
Power.)