AT&T allocates service department costs to its operating departments. In June 2040, the following costs are provided:

• IT Department: $2,000,000
• HR Department: $1,500,000
• Operating Departments: Sales ($3,000,000), Marketing ($2,000,000)

Requirements:

• Allocate service department costs using the direct method.
• Calculate the total cost for each operating department.
• Prepare a cost allocation report.
• Analyze the impact of cost allocation on departmental performance.