Sarahs Book and Tea Boutique has 2 Service Departments, Warehouse and Data Centre.

• Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours.
• Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours.
• The costs of Operating Departments Music and Books are $125,000 and $150,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:

	Support Departments		Production Departments
	Warehouse Department	Data Centre Department	Tea	Books
Budgeted costs	$175,000	$75,000	$125,000	$150,000
Budgeted warehouse-hours	NA	250	500	750
Number of computer hours	100	NA	400	500

Required:

1. Using the Direct method, what amount of Warehouse Department costs will be allocated to Books. What amount of Data Centre Department costs will be allocated to Tea?

(3 marks)

Warehouse	Data Centre	Tea	Books
TOTALS

2. Using the Step-Down method, what amount of Data Centre Department cost will be allocated to the Warehouse Department, if the Service department with the highest percentage of interdepartmental support service is allocated 1st? (Round up)

(3 marks)

Warehouse	Data Centre	Tea	Books
TOTALS