Part 1: Wearable Organics has three fiber divisions: Wool, Bamboo, and Alpaca. The new controller is reviewing allocation of fixed corporate overhead to the three division. The following chart provides data for 2021: Revenues Direct Mfg. Costs Alpaca $57,600,00 Wool $20,400,000 Bamboo $42,000,000 9,840,000 20,640,000 27,120,000 Division Admin. Costs 4,800,000 Division Margin Number of Employees $5,760,000 4,320,000 $17,040,000 7,680,000 $22,800,000 Floor space (sq. feet) 840 84,000 600 960 57,600 158,400 Until now, Wearable Organics has allocated fixed corporate overhead costs to the divisions on the basis of division margins. The new controller asks for a breakdown of the fixed corporate overhead costs and suggests the following possible allocation bases: Human Resource Management Allocation Base Fixed Corporate Overhead Costs $4,320,000 Number of Employees Facility Corporate Administration 6,480,000 Floor Space (sq. feet) 10,800,000 Division Admin. Costs $21,600,000 Total Costs Required: 1. Allocate 2021 fixed corporate overhead costs to the three divisions using division margin as the allocation base. What is each division's operating margin as a percentage of revenue? 2. Allocate 2021 fixed corporate overhead costs to the three divisions using the suggested new allocation bases. What is each division's operating margin percentage under the new method? 3. Which division would be most receptive to the new method of allocation? Which would be the least receptive? Justify your answer. 4. Which method should Wearable Organics use? Why?