Allocation and Responsibility Accounting Assume that Timberland Company uses a responsibility accounting system for evaluating its managers, and that abbreviated performance reports for the company's three divisions for the month of March are as follows.

(in thousands)	Total	East	Central	West
Operating income before service department cost allocations	$480,000	$200,000	$170,000	$110,000
Less allocated costs:
Information Technology	(250,000)	(96,154)	(76,923)	(76,923)
Personnel	(160,000)	(71,111)	(53,333)	(35,556)
Division income	$70,000	$32,735	$39,744	$(2,479)

The West Division manager is very disturbed over his performance report and recent rumors that his division may be closed because of its failure to report a profit in recent periods. He believes that the reported profit figures do not fairly present operating results because his division is being unfairly burdened with service department costs. He is particularly concerned over the amount of Information Technology costs charged to his division. He believes that it is inequitable for his division to be charged with one-third of the total cost when it is using only 20% of the services. He believes that the Personnel Department's use of the Information Technology Department should also be considered in the cost allocations. Cost allocations were based on the following distributions of service provided:

Services Receiver
		Computer
Services Provider	Personnel	Services	East	Central	West
Information Technology	35%		25%	20%	20%
Personnel		10%	40%	30%	20%

Required a. What method is the company using to allocate Personnel and Information Technology costs? AnswerDirect methodStep methodLinear algebra method b. Recompute the cost allocations using the step method. Note: Round your answers below to the nearest whole dollar.

	Service Departments	Producing Divisions
(in thousands)	Computer	Personnel	East	Central	West
Service department costs	Answer	Answer
Cost allocations:
Information Technology:	Answer
(1) To Personnel:		Answer
(2) To East:			Answer
(3) To Central:				Answer
(4) To West:					Answer
Personnel:		Answer
(5) To East:			Answer
(6) To Central:				Answer
(7) To West:	______	_______	______	______	Answer
Total cost allocations	Answer	Answer	Answer	Answer	Answer

c. Revise the performance reports to reflect the cost allocations computed in requirement (b).

(in thousands)	Total	East	Central	West
Income before allocations	Answer	Answer	Answer	Answer
Less allocated costs	Answer	Answer	Answer	Answer
Division income	Answer	Answer	Answer	Answer

d. Comment on the complaint of the West Division's manager. The complaint made by the manager of the West Division was _________________(well founded/inaccurate)

Please answer all parts of the question.