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Below are the indirect overhead costs for Holzman Cleaning Service (Holzman). There are only 12 commercial customers who are billed monthly. Residential customers comprise 150 customers who are billed after each visit. Expense Cost driver Cost pool Total Commercial Residential activity activity activity Cleaning supplies Square metres $70,833 664,054 664,054 commercial Cleaning supplies Square metres 17,708 442,703 442,703 residential Billing Number of invoices 129,500 3,054 1,062 1,992 Transportation Number of kilometres 30,281 53,124 15,937 37,187 Training Number of hours 55,500 554 416 138 Operations Number of managers 120,000 3 1 2 management Total expenses $423,822 Holzmann's management reports for each division are usually created using revenue as the method of allocating costs which results in a 60/40 split. Below is the partial profit statement by segment for the period as they are currently prepared: Commercial Residential Total Sales $492,991 $328,660 $821,651 Direct labour 175,310 116,874 292,184 Cleaning supplies 53,125 35,416 88,541 Transportation 18,169 12,112 30,281 Salaries operations management 72,000 48,000 120,000 Administrative expense (training and billing) 111,000 74,000 185,000 Segment profit (loss) 63,387 42,258 105,645 Required: a) Using activity-based costing and the information provided above, prepare a partial profit analysis by segment for commercial and residential operations of Holzmann Cleaning Services. The allocation of revenue and direct labour will not change. Prepare a partial operating statement that includes all direct and traceable overhead costs (4 marks). b) Compare the segment margins between the commercial and residential operations under the activity-based costing. Identify any areas of concern and note possible reasons if available for the differences between the current method and activity based cost allocations. (4 marks)