Brandon Cleaning provides cleaning services for a variety of clients. The company has two producing departments, Residential and Commercial, and two service departments, Personnel and Administrative. The company has decided to allocate all service department costs to the producing departments— Personnel on the basis of number of employees and Administrative on the basis of direct department costs. The budget for 2012 shows the following:

1. Allocate service department costs using the direct method.
2. Allocate service department costs using the step-down method. Personnel costs should be allocated first.
3. Suppose the company prices by the hour in the Residential Department and by the square foot cleaned in Commercial. Using the results of the step-down allocations in number 2,
a. Compute the cost of providing one direct-labour-hour of service in the Residential Department.
b. Compute the cost of cleaning one square foot of space in the Commercial Department.

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Personnel Administrative Residential Commercial Direct department $ 240,000 $ 400,000 $70,000 $90,000 costs Number of employees Direct-labour- hours 3 5 12 18 36,000 24,000 |Square feet 4,500,000 9,970,000 cleaned