Create an Excel spreadsheet to allocate costs using the direct method and the step-down method. Use the results to answer questions about your findings.

Scenario: Texas Building Services has asked you to help it determine the best method for allocating costs from its service departments to its producing departments. Personnel Admin Residential Commercial

Direct dep costs $70,000 $100,000 $240,000 $400,000

# of employees 3 5 12 18

Direct labor hours 24,000 36,000

Square feet cleaned 4,500,000 9,970,000

1. What are the total costs for the residential departments using the direct method? What are the total costs for the commercial department using the direct method?

2. What are the total costs for the residential department using the step-down method?

3. What are the total costs for the commercial department using the step-down method?

4. Which method would you recommend that Dallas Cleaning use to allocate its service departments