Direct and step methods Salado Inc. provides cleaning services through its Residential and Commercial divisions. Support services of the company are provided by Personnel and Administration areas. Costs of these two areas are allocated to the revenue producing departments. Personnel costs are allocated using number of employees; administration costs are allocated using direct department costs. The following annual budgeted information (presented in a benefits-provided ranking) is available: Personnel Administration Residential Commercial Direct costs $196,000 $252,000 $672,000 $1,120,000 Number of employees 17 42 101 67 Direct labor hours 84,000 126,000 Square feet cleaned 630,000 798,000 a. Using the direct method, allocate the costs of Personnel and Administration to the Residential and Commercial divisions. Note: Do not round proportions; round your final answer to the nearest whole dollar. Total support costs allocated to Residential = Answer Total support costs allocated to Commercial = Answer b. Using the step method, allocate the costs of Personnel and Administration to the Residential and Commercial divisions. Note: Do not round proportions; round your final answer to the nearest whole dollar. Total support costs allocated to Residential = Answer Total support costs allocated to Commercial = Answer c. Salado prices jobs by the direct labor hour for Residential services and by the square foot cleaned for Commercial services. Compute the full cost of providing one direct labor hour of service for Residential and for one square foot cleaned for Commercial using (1) the direct method and (2) the step method. Note: Round your answers to two decimal places (i.e. round $4.555 to $4.56). (1) Direct Method Residential cost per hour of service Answer Commercial cost per square foot cleaned Answer (2) Step Method Residential cost per hour of service Answer Commercial cost per square foot cleaned Answer

Direct and step methods Salado Inc. provides cleaning services through its Residential and Commercial divisions. Support services of the company are provided by Personnel and Administration areas. Costs of these two areas are allocated to the revenue producing departments. Personnel costs are allocated using number of employees; administration costs are allocated using direct department costs. The following annual budgeted information (presented in a benefits-provided ranking) is available: Direct costs Number of employees Direct labor hours Square feet cleaned Personnel Administration Residential Commercial $196,000 $252,000 $672,000 $1,120,000 17 42 101 67 84,000 126,000 630,000 798,000