4. Do you need to allocate costs/revenue between units? If so, how much and why? yes - between Basic and Deluxe based on levels of service and associated costs the 3 divisions will have overhead that hits both units (Basic vs. Deluxe) e.g., traceable fixed cost associated w/ operations manager salary of the Deluxe offering

Cost Type (Direct vs. Indirect) & Cost Allocation Cost Type (Direct vs. Indirect Cost Allocation Direct Costs include: (1) the Concierge support (i.e personnel costs for customer support) to help a customer complete their level of service purchased and (2) variable overhead components (a) Transaction fees on credit card payments and (b) Webhosting/ application setup. Both costs directly correlate with the sales of the company for any of the products sold. Click to add text Indirect Costs include: Rent paid for Office space leased for management. All costs mentioned have been considered to occur without sales and therefore has been classified as indirect costs. All other costs reviewed were considered components of Selling Costs or Administrative Costs annual amounts shown below Direct Costs Concierage Personnel costs for customer support $2,275,000 $175,000 $350,000 Transaction fees on credit card payments Webhosting / application setup ndirect Costs Rent $540,000