Muley Hand manufactures mane brushes for horses and mules in two operating divisions (O1 and O2) and has two service departments (Human Resources and Janitorial/Maintenance). The two service departments costs are allocated to the two operating departments as follows:

Service Department	Allocation Base	Costs
Human Resources	# of employees	600,000.00
Maintenance/Janitorial	square footage	800,000.00

The following table summarizes the number of employees and the square footage in each division and department.

	Service Department		Operations
	Human Resources	Maintenance/Janitorial	O1	O2	Total
Human Resources	0	50	550	400	1000	Employees
Maintenance/Janitorial	10	0	200	390	600	Square Footage

REQUIRED:

a) Allocate the costs of the two service departments to the two operating divisions using the direct allocation method.

b) Allocate the costs of the two service departments to the two operating divisions using the step-down allocation method where Human Resources is allocated first and Janitorial/Maintenance is allocated second.

c) Allocate the costs of the two service departments to the two operating divisions using the step-down allocation method where Janitorial/Maintenance is allocated first and Human Resources is allocated second.

d) Compute the Human Resource Department cost per employee under two allocation methods (direct allocation, step-down allocations where Human Resources is first, and the step-down method where Janitorial/Maintenance is first).

e) Compute the Janitorial/Maintenance cost per square foot under two allocation methods (direct allocation, step-down allocations where Human Resources is first, and the step-down method where Janitorial/Maintenance is first).

	Service Dept.		Operating Division
	HR	Jan/Main	O1	O2	Total	Allocation Base		Total Costs
Human Resources	0	50	550	400	1000	Employees		600,000
Janitorial/Maintenance	10	0	200	390	600	Sq. Footage (000s)		800,000
A.	O1	O2
HR (OP Divison only)
Jan/ Main (OP Divison only)
	O1	O2	Total
HR Allocation	$ -	$ -	$ -
Jan/ Main Allocation	$ -	$ -	$ -
	$ -	$ -	$ -
B.	Jan/Main	O1	O2
HR
Jan/Main		0.00%	0.00%
	Jan/Main	O1	O2	Total
HR Allocation	$ -	$ -	$ -	$ -
Jan/ Main Allocation		$ -	$ -
	$ -	$ -	$ -	$ -
C.	HR	O1	O2
Jan/Main
HR		0.00%	0.00%
	HR	O1	O2	Total
Jan/ Main Allocation	$ -	$ -	$ -	$ -
HR Allocation		$ -	$ -		$ -
	-	$ 3	$ -	$ 3
D.	Total	Employees	Cost/Employee
Direct Allocation			#DIV/0!
Step Down-HR First			#DIV/0!
Step Down-Jan First			#DIV/0!
E.	Total	Sq Footage	Cost/Sq Ft
Direct Allocation			#DIV/0!
			#DIV/0!
			#DIV/0!