Assessment 3 Part 4: Comparison of Allocation Methods Scenario: Liberty Company has two service departments: administration and accounting, and two operating departments: domestic and international. Administration costs are allocated on the basis of employees and accounting costs are allocated on the basis of number of transactions. A summary of Liberty operations follows: Employees 3 Transactions Department Direct Costs 0 1 REQUIRED Administration 27,500 $396,000 Accounting Domestic International 25 45 180 22,000 88,000 $158,400 $1,029,600 $3,960.000 REQUIRED 1. Allocate the cost of the service departments to the operating departments using the direct method. 9 2. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. 0 1 2 3 34 5 16 47 48 49