It has two divisions, an Urban Division catering to urban customers and a Rural Division catering to rural customers. Currently, the company allocates corporate overhead on the basis of revenues of the two divisions. Harvey Leonard, ISPStar's president, believes that this method of allocation does not adequately capture the demands that the two divisions put on corporate resources. He proposes developing a cost-hierarchy income statement and also an income statement allocating corporate overhead costs based on the number of service hours used in the two divisions. The Rural Division has a higher number of service hours because service personnel have to travel longer distances to reach customers. PLEASE ANSWER THE FOLLOWING QUESTIONS: Requirements 1. Prepare a cost-hierarchy income statement for ISPStar assuming corporate costs are not allocated to each division. 2. Allocate the corporate costs to each division and calculate the income of each division after assigning corporate costs based on revenues of each division. 3. Allocate the corporate costs to each division and calculate the income of each division after assigning corporate costs based on service-hours worked in each division. 4. What are the advantages and disadvantages of ISPStar allocating corporate overhead costs to the two divisions? 5. Based on your answers to requirements 1 through 4, should Leonard close down the Rural Division? Explain. Data table Urban Division Rural Division Total Revenues Customer-level costs $ 4,840,000 $ 3,960,000 $8,800,000 2,800,000 2,700,000 5,500,000 $ 2,040,000 $ 1,260,000 $3,300,000 Customer-level operating income Customer-level operating income percentage 42.15% 31.82% 37.5% Service-hours worked 6,000 hours 12,000 hours 18,000 hours In addition to the customer-level costs above, the company expects to incur $2,250,000 of corporate costs.