Allocation of Support Departments Western Sales, Eastern Sales, and International Sales are profit centers for XYZ Company. Human Resources, Information Systems, and Maintenance are support departments, and each is a cost center. Management has chosen to allocate support department costs to the profit centers. 1. For each support department, choose an appropriate allocation base from the Potential Allocation Bases and allocate the costs of those departments to the profit centers. Each profit center is to receive some of the cost of each of the support departments. Use the direct method of allocation. Use the space provided below to accomplish the allocation. 2. Calculate Operating Income, after allocation, for each of the profit centers. 3. In the text box below the worksheet, justify your choice of allocation base for each service department. Describe which of the general allocation criteria guided your choice of allocation base for each service department. Potential Allocation Bases Western Sales Eastern Sales International Sales Number of employees 42 21 15 Number of computers used 25 15 15 Hours of computer processing time used 2,000 1,000 9,000 Computer network storage space used by each dept. (gigabytes) 56 45 67 Square feet of space used by each dept. 4,000 6,000 5,000 Total hours per month employees use social media, shopping sites, etc. for personal purposes. (IT Services can monitor this.) 210 147 50 Revenues $1,500,000 $850,000 $750,000 Direct Departmental Costs $998,000 $490,000 470,000 Departmental Margin $502,000 $360,000 $280,000 Allocation Worksheet Human Resources "Information systems" Maintenance Western Sales Eastern Sales International Sales Department Revenues $1,500,000 $850,000 $750,000 Direct Costs $72,700 $234,400 $150,000 $998,000 $490,000 $470,000 Depart