(30 points)

Shannon Office Supplies (SOS) Ltd. is an online supplier of office products. The managers of the operating divisions are assessed on their ability to control all overhead costs incurred and allocated to their division. Two service departments, Administration and Technology Services, provide support for SOSs operating divisions. Budgeted data for the coming quarter are provided below:

Service departments Operating divisions

Technology Corporate Consumer

Admin. Services Sales Sales

Overhead costs	$ 375,000	$ 275,000	$390,000	$ 420,000
Employees	10	40	50	30
Support hours provided	800	400	3,600	2,800

Administration costs are allocated based on the number of employees in the department and Technology Services costs are allocated based on support hours provided.

Required:

Allocate overhead from the two service departments using the direct method and determine the total overhead for each operating division.

Allocate overhead from the two service departments using the step method and determine the total overhead for each operating division. You should allocate the Administration Department first.

Allocate overhead from the two service departments using the reciprocal method and determine the total overhead for each operating division.