ent costs using rent ranking itability E14.3 (LO 2), AP As the managing partner of Horizon Accounting Services (HAS), Adam is trying to compare the profitability results of the firm's three different business lines: Audit, Tax, and Advisory Services. These three operating divisions are supported by three support departments: Billing, Human Resources, and IT. The cost drivers (or allocation bases) for each of the support departments, along with each department's usage of those services and its own original costs, are as follows. Support Departments Operating Divisions Billing HR IT Audit Original cost $65,000 $115,000 $95,000 $525,000 Tax $835,000 Advisory $320,000 Totals $1,955,000 Billing hours used - 2,000 1,400 600 4,000 Number of employees 2 2 1 12 15 3 35 IT hours used 100 200 200 900 600 300 2,300 Required Rank the three support departments by their original costs, and then allocate the support department costs using the step method. b. Rank the three support departments based on the percentage of their service provided to other support departments, and then allocate their costs using the step method. e. The total revenue earned by each operating division is Audit, $805,000; Tax, $1,240,000; and Advisory. $580,000, Evaluate the profitability of each operating division, first using the costs from part (a) and then using the costs from part (b). Compare the gross margin percentages for each of these divisions to their profit margin percentages. Comment on the usefulness of allocating the support department costs to the operating divisions. E14.4 (LO 2), AP Excel Dr. Marj is evaluating her dental practice with her colleague, Dr. Juan. Dr. Marj provides general dental services, while Dr. Juan provides orthodontic care. They utilize shared business services (Including human resources, billing, and purchasing) as well as shared maintenance services. Here is a sum- dees are allocated based on hours on task and maintenance Determin using the