Sriram Motor Works manufactures scooters and other two-wheelers for sale in Asia. The firm has divided its operations into two main factories:

one in Pune, India, and the other in Malaysia. The firm is contemplating the best way to allocate the support costs in the head office to the two divisions. The following data are available.

Required:
a. Determine the costs allocated to the Indian and the Malaysian divisions using the direct method.
b. Repeat the requirement using the step-down method.
c. Why do your answers not depend on the method youuse?

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General ia Malaysian Human Resources Administration Division Division Traced costs $760.000 S.460.000 n/a n/a Service consumption pattern Services consumed b himan Genera! Indian Malaysian Resources Administration Diviin Division Human Resources General Administration Services 40% 60% rovided by 50% 50%