Admiral Company has two support departments, Personnel and Maintenance, and two production departments, Department A and Department B. Cost records for the month of June reported the following: Personnel	Maintenance	Dept A	Dept B
$40,000	$160,000	$240,000	$120,000
Support provided by the Personnel Dept.	34%	40%	26%
Support provided by the Maintenance Dept.	6%	24%	70%

Required

(A) Allocate costs from the support departments to the production departments using the direct method.

(B) Allocate costs from the support departments to the production departments using the step-down method with the Maintenance department allocating first.

(C) Allocate costs from the support departments to the production departments using the reciprocal method, either linear equations or repeated iterations.

(D) Why do companies allocate support costs to production departments? Discuss.