Form small groups and prepare a short visual presentation that Tukami could use to explain the advantages and disadvantages of using traditional cost-allocation bases and ABC cost-driver bases for allocating support-service costs at Rock Creek (in the chapter example).

Polish Enterprises allocates service costs to its East and West Divisions. During the past month, it incurred the following service costs:

COmpULINGISEhVICeS =... eee ornare $254,000 UmManmeSOUnCeSEe tae acme cee ener 615,000 CuUstodialsenviceSz.ce- ete eee 104,000 ;

The following information concerning various activity measures and service uses by each of the divisions is available:

East West TESANOC OU DISC area wi seteerins. Sreencas.cceseuetnyae adse ar 15,000 sq. ft. 40,000 sq. ft.

DAW Ol eee mmr tT: Sooo. at cas satiate nr ac anita Renee aeeke $380,000 $170,000 GOMPULEK IMG Seed AES ee eee eet 200 hr. 140 hr.

ComouterRstOnag Snana treat renee 25 gigabytes 35 gigabytes EGUIOMMeMINValUCH te aca stn ateer ene eee one ee $175,000 $220,000 Operating profit, before allocations........0....000 $439,000 $522,000 Required

a. Allocate the service costs to the two divisions using the direct method and the most appropriate of these allocation bases. For computing services, use computer time only.