PART I ANSWER THREE QUESTION Question 1 Modoc bank is a small retail bank with two branches, downtown and Mall. It has three service departments: Personnel, Finance, and Building Occupancy. The service departments provide support to both branches as well as to the other service departments. However, the branches are considered the only two profit centers, and the branch managers are evaluated on branch profits after allocation of service department costs. During the current period after, the direct costs incurred in each of the departments follow: Department Personnel Finance Building Occupancy Downtown. Mail Total Direct cost $202,500 126,000 150,000 950,000 425,000 $1,853,500 Personnel costs are allocated on the basis of number of employees, Finance costs are allocated on the basis Billable transaction. Building Occupancy costs are allocated on the basis of the number of square feet in each user department. For the current period, the following table summarizes the usage of service by other service cost centers and other departments: Service Department Building Occupancy (Square feet) Departments Personnel (Employees) Finance (transactions) Personnel 0 12,000 14,000 Finance 20 0 11,000 Building Occupancy 25 2,000 0 Downtown 65 61,000 30,000 Mall 25 23,000 45,000 Total 135 98,000 100,000