Harborside Senior Healthcare, Inc. is a nursing home facility that has an Assisted Living division

andaNursingCaredivisionforresidentswhoneedround-the-clockcare.Thesupport

departments of Janitorial and Food Services allocate their costs to the Assisted Living and

Nursing Care divisions. The Janitorial costs are allocated based on square footage, and the Food

Services costs will be allocated based on the headcount. Information about each department is

provided in the following table:

Janitorial Food Services Assisted Living Nursing Care

Department Department Division Division

Square feet 1,000 20,000 100,000 80,000

Labor hours 30 20 120 450

Production costs $400,000 $800,000 $2,000,000 $8,000,000

Your assignment:

1)Determine the total costs from the support departments that should be allocated to

each of the production departments by using the direct method of support

department cost allocation.

2)Why is this important?How should this information be used?