Cranshaw Business Services (CBS) operates an information technology (IT) consulting firm out of two offices: Detroit and Los Angeles. Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs of these services are allocated to the two offices for the purposes of profitability assessment. The Detroit office is the original unit of the company and is well estabilished, having long-time clients from the automotive and other manufacturing industries. The Los Angeles office is new with a smallec, much more varied, clientele. The costs of personnel services at CBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personnel department totai $350,000. Data for the fiscal year just ended show the following: Exercise 9-31 (Static) Unitwide versus Department Allocation-Administrative (Service) Function (LO 9-2, 3) Required: a. Compute the cost allocated to each unit using the current allocation system. b. The manoger of the Detrolt office believes thet Detoit gets itte benefit from the personnel office other than the occasional hire and termination help. The manager asks the contioller's office to estimate the amount of Personnel Department cost associated With toutine persomnel matters (benefis and so onj and those associated with hiring employees and assisting with departing employees (transitions). The controlec responds that if they separated the overhead cosis on this basis, the cost of the Porsonnel Department for routhe matters is $200,000 and the cost of the Personnel Department for transitions (each hire and each departure counts as one transinion is 5150,000 Aecompute the costs asocoted to each unt uaing the separate rates for routine and transitional matters: Cranshaw Business Services (CaS) operates an information technology (IT) consuiting firm out of two oftices: Detroit and Los Angeles, Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs of these services are allocated to the two offices for the purposes of profitablity assessment. The Detroit office is the original unit of the company and is well established, hoving long-time clients from the automotive and other manufacturifg industries. The Los Angeles office is new with a smaller, much more varied, clientele. The costs of personnel services at CBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personnel department totai $350,000. Data for the fiscal year just ended show the following: Exercise 9-32 (Static) Unitwide versus Department Allocation-Decision Making (LO 9-1, 2, 3) The manager of the Los Angeles office is now unhappy with the results of the controller's study. The manager asks the controller to develop separate rates for fixed and variable costs in the Personnel Department. The controller reports back to the Los Angeles manager that the costs would be as follows: required: a. The manager claims that the Los Angeles office should only be allocated the variable costs from this system, becouse the company would have to pay the fiond costs even if the Los Angeles office did not exist. Compute the cost allocoted to each unit using the opproach the Los Angeles manager prefers