REQUIRED:

1. Allocate occupancy costs to the Diaz and Wright departments using the current allocation method.

2. Allocate the depreciation, intrest, and taxes occupancy costs to the Diaz and Wright departments in proportion to the relative market values of the floor space. Allocate the heating, lighting, and maintenance costs to the Diaz and Wright departments in proportion to the square feet occupied (ignoring floor space market values).

3.Which allocation method would you prefer if you were a manager of a second-floor department? Explain.