Ambuka Ltd is selling shoes for children in primary school. Ambuka's operating department has two independent units that specifically selling the product to two group of customers: School-customers and Individual customers. In addition, Ambuka Ltd also has two support departments: Human Resources (HR) and Information Technology (IT). Ambuka Ltd uses number of employees to allocate HR costs and budgeted processing time to allocate IT costs. The following data are available for March 2018.

Support Departments

Operating Departments

Budgeted costs

HR

IT

Company

Individual

$1,200,000

$3,500,000

$5,000,000

$4,000,000

Budgeted processing time (in min)

1,000

---

1,600

2,400

Number of employees

---

15

9

36

Required (show your working):

Allocate the costs from support departments to operating departments and determine the total budgeted cost of each operating department after the cost has been allocated from the support departments using the following method:

(a)Direct method

(b)Step-down method if the support department with the highest dollar amount is allocated first

(c)Reciprocal method