Dynamic Petroleum Logistical Solutions is an integrated company providing oil exploration, crude oil refining and petroleum products distribution throughout the United States and Canada. You have been provided with Direct Costs for the following 4 service organizations and 3 operating organizations: Service Organizations: 1. Home Office 2. Information Systems 3. Human Resources 4. Accounting Operating Organizations: 1. Exploration 2. Refining 3. Distribution Using both the Direct and Step-Down methods, calculate the total allocated service costs and direct costs for the operating organizations: Exploration Division, Refining Division, and Distribution Division. 2 3 Direct Method -- Percentage of Services Used By Service Organizations Information Systems Accounting Exploration Operating Organizations 4 Organization Direct Costs Home Office Human Resources Refining Distribution Total Direct Basis 5 Home Office $575,000 10% 10% 10% 20% 50% 10% 80% 6 Information Systems $330,000 10% 10% 10% 40% 20% 20% 80% 7 Human Resources $410,000 10% 10% 10% 50% 20% 10% 80% 8 Accounting $731,200 10% 10% 10% 60% 10% 10% 80% 9 Exploration $650,000 10 Refining $337,800 $695,000 11 Distribution 12 Total Costs $3,729,000 30% 30% 30% 30% 170% 100% 50% 13 14 Allocated Services Costs + Direct Costs 15 Exploration Refining Distribution Totals 16 Home Office 0 17 Information Systems D 18 Human Resources 0 19 Accounting 0 20 21 Total Allocations 0 22 23 Direct Costs D 24 25 Total Costs $0 $0 $0 $0 Step Method -- Percentage of Services Used By 2 Service Organizations Operating Organizations 3 Organization Direct Costs Home Office Information Systems Human Resources Accounting Exploration Refining Distribution Total Direct Basis 4 Home Office 10% 10% 10% 20% 40% 10% 100% $575,000 $330,000 5 Information Systems 10% 10% 10% 20% 20% 30% 90% 6 Human Resources $410,000 10% 10% 10% 30% 20% 20% 80% 7 Accounting $731,200 10% 10% 30% 20% 20% 70% 8 Exploration $650,000 9 Refining $337,800 10 Distribution $695.000 11 Total $3,729,000 30% 30% 20% 30% 100% 100% 80% 12 13 Step Down Allocated Services Costs + Direct Costs 14 Base Cost Step Down Cost Information Systems Human Resources Accounting Exploration Refining Distribution Total Costs 15 Home Office 16 Information Systems 17 Human Resources 18 Accounting 19 Total Allocated Costs 0 0 0 20 21 Direct Costs 22 23 Total Costs $0 $0 $0 $0 24 25 26 Direct Method $0 $0 $0 $0 27 28 29 Difference between the methods $0 $0 $0 $0