Question 4 Falatah hotel is situated on a beautiful beach in the UAE. The complex includes 300-room hotel, and a restaurant. You are a new Falatah controller, and your manager asks you to recommend the basis the hotel should use for allocating overhead costs to the two divisions. You are presented with the following income statement information for 2019. Division AED Hotel Restaurant Revenues 15,200,000 3,800,000 Direct costs 9,120,000 2,280,000 Segment margin 6,080,000 1,520,000 You are given the following data: Floor space (square feet) Number of employees 106,400 266 21,280 67 You are told that you may choose to allocate indirect costs based on one of the following: floor space, or number of employees. Total fixed overhead costs for 2019 were $ 6,840,000 Requirements 1 Compute operating income for each division using both approaches for allocation of fixed costs (floor space and number of employees). 2 Which are the principles to be followed while allocating overhead costs to divisions? List at least two