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James Realty classifies its operations into three departments: Commercial Sales, Residential Sales, and Property Management. The owner, Mary Manalo, wants to know the full cost

James Realty classifies its operations into three departments: Commercial Sales, Residential Sales, and Property Management. The owner, Mary Manalo, wants to know the full cost of operating each department. Direct departmental costs and several allocation bases associated with each follow:

Available Allocation Bases
Direct Costs No. of Employees Pesos of assets employed Pesos of Revenues
Administration $ 750,000 10 $ 1,240,000 n/a
Accounting $ 495,000 5 $ 682,000 n/a
Promotion $ 360,000 6 $ 360,000 n/a
Commercial Sales $ 5,245,000 21 $ 500,000 $ 4,500,000
Residential Sales $ 4,589,510 101 $ 725,000 $ 9,500,000
Property Management $ 199,200 13 $ 175,000 $ 500,000

The support departments are shown in a benefits-provided ranking. James has selected the following allocation bases for each department: number of employees for administration, pesos of assets employed for accounting, and pesos of revenue for promotion.

Required:

a. Use the step method to allocate the support department costs to the revenue-generating departments.

b. which department is apparently the most profitable.

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