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THU Cleaning (THUC) provides cleaning services for a variety of clients. The company has two producing departments, Residential and Commercial, and two service departments, the

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THU Cleaning (THUC) provides cleaning services for a variety of clients. The company has two producing departments, Residential and Commercial, and two service departments, the Personnel department and Administrative department. The company has decided to allocate all service department costs to the producing departments, Personnel on the basis of number of employees and Administrative on the basis of direct-labor hours. The budget for 2013 shows the following (actual direct-labor hours and actual square feet cleaned are the same as budgetted) Budget 2013 Personnel Administrative Residential Commercial 70.000 400.000 20 40.000 37.000 84.000 Direct Department Cost Number of Employees Direct-Labor hours Square Feet cleaned 40.000 12 30.000 33.000 a) Allocate service department costs using the direct method to Residential and Commercial. (Allocate the Administrative department first) b) Allocate service department costs using the step-down method to Residential and Commercial. (Allocate the Administrative department first) c) What is the difference in total cost allocation between the direct method and the step down method? d) Suppose the company prices by the hour in Residential and by the square foot in Commercial. Using the results of the step-down method as calculated under part b) of this question, what would be: 1) The cost of providing 1 hour of cleaning in Residential 2) The cost of cleaning 1 square foot in Commercial

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