(Comprehensive) The costs of operating the service departments (Personnel and Administration) at Buxton Architectural are allocated to the revenue-generating departments (Commercial and Residential). The direct and allocated costs are accumulated in the revenue-generating departments and applied to engineering projects. The following data relate to the allocation bases used and the direct costs of the company’s departments:

a. Use the direct method to allocate the service department costs to the revenue¬ generating departments. What are the total costs of each revenue-generating department after the allocation?

b. If the benefits-provided ranking is (1) Personnel and (2) Administration, use the step method to allocate the service department costs to the revenue- generating departments. What are the total costs of each revenue-generating department after the allocation?

c. Use the algebraic method to allocate the service department costs to the revenue-generating departments. What are the total costs of each revenue¬ generating department after the allocation?LO1

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NUMBER OF EMPLOYEES DOLLARS OF ASSETS DIRECT DEPARTMENT EMPLOYED COSTS Personnel (# of employees) 2 $100,000 $125,000 Administration (Ss of assets employed) 3 112,500 375,000 Residential 10 612,500 600,000 Commercial 15 925,000 725,000