O- books, an online book retailer, has two operating divisionslong dashcorporate sales and consumer

saleslong dashand two support divisionslong dashhuman resources and information systems. Each sales division conducts merchandising and marketing operations independently. O-books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The following data are available for September 2015:

	Support Divisions			Operating Divisions
	Human	Information		Corporate	Consumer
	Resources	Systems		Sales	Sales
Budgeted costs incurred before any
interdivision cost allocations	$71,000	$236,000		$995,000	$484,000
Support work supplied by human
resources division
Budgeted number of employees		24		40	31
Support work supplied by information
systems division
Budgeted processing time (in minutes)	300			2,000	1,700

Required

1.	Allocate the support divisions' costs to the operating divisions using the direct method.
2.	Rank the support divisions based on the percentage of their services provided to other support divisions. Use this ranking to allocate the support divisions' costs to the operating divisions based on the step-down method.
3.	How could you have ranked the support divisions differently?