1. Using the direct allocation method, allocate costs to the revenue centers. 2. Using the step-down method, allocate costs to the revenue centers.
rusyst
| Allocation Statistics | |||||||||
| Cost Centers | Direct Costs ($) | Maintenance Hrs of Serv. (%) | Telecom. # of Phones (%) | ||||||
| Nonrevenue | |||||||||
| Maintance | 80,000 | 5 | |||||||
| Telecomunications | 40,000 | 15 | |||||||
| Revenue | |||||||||
| Per Diem | 900,000 | 40 | 90 | ||||||
| OR | 300,000 | 45 | 5 | ||||||
| Total Costs | 1,320,000 | 100 | 100 | ||||||
Use the information provided in table 4-6 to answer the questions below:
1. Using the direct allocation method, allocate costs to the revenue centers.
2. Using the step-down method, allocate costs to the revenue centers.
3. Analyze the results of the two allocation methods. Do they differ? Why? Which one would you recommend?
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