Solved by verified expert :L & M 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 services department, personal and administrative. Until now the company has not allocated service department cost. However L&M has decided to allocate these costs to the producing departments using an activity-based allocation systemMore info. 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 personal costs on the basis of number of employees and administrative on the basis of the direct cost of the activity in each division. However administrative services are provided only to activity 2 and 3, so no administrative costs are allocated to activities 1,4 and 5 Number of Personnel Direct costPersonel 7 $90,000administrative 6 130,000Retial:Activity 1 5 65000activity 2 16 210000Industrial:Activity 3 17 300000Activity 4 0 110000Activity 5 9 90000Requirements:1.Determine the cost allocated to the retail and industrial divisions using the direct method2.Determine the costs allocated to the retail and industrial divisions using the step-down method. The personnel department cost should be allocated first
