Reference no: EM132558902

M&O Partners provides consulting services for a variety of clients. the company has two producing divisions, one for retail companies and one for industrial companies, and two service departments, personnel and administrative. Until now the company has not allocated service departments using an activity-based allocation system. the retail division has activity 1 and activity 2 and the industrial division has activity 3, activity 4, and activity 5. the company has decided to allocate personnel costs on the basis of number of employees and administrative services are provided only to activities 2 and 3m so no administrative costs are allocated to activities 1, 4, and 5.

Data fot the activities follow:

                                            number of personel                          Direct Costs

Personel                                          2                                             $92,000

Administrative                                   5                                              170,000

Retail:

Activity 1                                            3                                            60,000

Activity 2                                            12                                          240,000

Industrial:

Activity 3                                            18                                             400,000

Activity 4                                              0                                              90,000

Activity 5                                               8                                            110,000

Question 1: Determine the costs allocated to the retail and industrial divisions using the direct method.

Question 2: Determine the costs allocated to the retail and industrial divisions using the step-down method. The personnel department costs should be allocated first.