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 (amounts in thousands).

Total East Central West

Income 200,000 70,000 80,000 50,000

Less allocated costs:

Information Technology (96,000) (32,000) (32,000) (32,000)

Personal (75,000) (28,125) (28,125) (18,750)

Divison income $29,000 $9,875 $19,875 $(750)

The west divison manager is very disturbed over his performance report and recent rumors that he's 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 divion is being unfairly burndend with service department costs. He is particularly concerned over the amount of information Technology costs charged to his divison. 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 percent of the services. He believes that the personnel departments 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 Provider Personnel Computer Services East Central West

Information Technology 40% ---- 20% 20% 20%

Personnel ----- 20% 30 30 20

Question: Do direct allocation