The Pickup and Drop off Co. run a limousine and shuttle firm. The firm has both luxury limousines rented by time and a shuttle bus service to the airport. Two separate managers, evaluated as profit centers, oversee each service. Pickup and Drop off also have two cost pools for support activities: maintenance and administration. The following table provides relevant data:

The limousine department expects to offer 10,000 hours of service, and the shuttle department expects to provide 20,000 hours of service.
Required:
a. Allocate the support department costs to the line departments using the direct method. Calculate the hourly cost rates for the two line departments-limousine and shuttle services.
b. Allocate the support department costs to the line departments using the step-down method. Allocate maintenance costs before allocating administration costs. Calculate the hourly cost rates for the limousine and shuttle services
c. Allocate the support department costs to the line departments using the step-down method. Allocate administration costs before allocating maintenance costs. Calculate the hourly cost rates for the limousine and shuttle services.
d. Allocate the support department costs to the line departments using the reciprocal method. Calculate the hourly cost rates for the limousine and shuttle services.
e. Notice that, regardless of the method used to allocate support costs, the hourly cost rates are quite similar. Why do you believe this is the case?

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Maintenance Administration Limo Shuttle mtial cost n pool $94,000 Service consuption pattern Services consumed b Maintenane Administration Lino Shutde Services Maintenancc provided Administration 1,000 hour 4,500 hours 4,500 hurs 18 persons 27 persons נ persons