Assignment 4.6. Applying the Direct Allocation Method HFA has two program departments, one for the treatment of ex-convicts who are drug users and the other for a job training program for ex-convicts. The treatment pro- gram hires 40% of the program employees but accounts for approximately 63% of expenses for both programs. HFA also has two support departments, one for general management (administration) and the other for fundraising. These are smaller depart- ments but they provide vital services. Initial allocation of the costs based on square footage notes the direct and indirect costs for each department, as shown in Table 4.6. Using this information, calculate the full cost for the two program departments so that cach program can be accurately reimbursed. It is HFA's policy to allocate general management costs by the proportion of employees and to allocate fundraising costs by the proportion of program expenses using the direct distribution method. Table 4.6 HFA's Direct and Indirect Costs Administration Fundraising Drug Treatment Job Training Total Direct Costs $ 50,000 $ 100,000 $ 500,000 $ 300,000 $ 950,000 Indirect Costs 20,000 30,000 100,000 50,000 200,000 Total Costs $ 70,000 $ 130,000 $ 600,000 $ 350,000 $ 1,150,000