Required

a) Report the total costs of operation departments (the Deposits Department and the Loan Department) after the support departments' (the Human Resources Department and the Computing Departments) costs have been allocated using each of the following methods:

i) Direct Method

ii) Step Down Method (The bank allocates the costs of the Human Resources Department first.)

iii) Reciprocal Method

b) Diamond Trust Bank evaluates the performance of the operation department managers on the basis of how well they manage their total costs, including allocated costs. As the manager of the Loan Department, which allocation method would you prefer? Why?