=+6-23 KK Allocating costs to divisions OBJECTIVE 2 Benderson Ltd manufactures appliances in four divisions: Vacuum cleaner, Stove, Dishwasher and Washing machine. Each division is located in a different city and the headquarters are located in Rockhampton. Headquarters incurs a total of $15000000 in costs, none of which are direct costs of any of the divisions. Revenues, costs and organisation space for each division are as follows:

Vacuum cleaner Stove Dishwasher Washing machine Revenue $10 900 000 $18 800 000 $11 500 000 $6 780 000 Direct costs 5 700 000 10 400 000 6 200 000 3 220 000 Segment margin $5 200 000 $8 400 000 $5 300 000 $3 560 000 Square metres of floor space occupied 12 000 8 000 7 000 9 000 Benderson Ltd wants to allocate the indirect costs of headquarters on the basis of either square metres or segment margin for each division.

Required 1 Allocate the indirect headquarters costs to each division, first using square metres of space and then using segment margin as the cost-allocation base. Calculate the division operating margins after each allocation in dollars and as a percentage of revenues.