Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations ollows: Employees Hours Department direct costs Required A Required B Required C Complete this question by entering your answers in the tabs below. Department costs Personnel allocation. Legal allocation Total costs Personnel Personnel $ 10,800 $ 300,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. 0 $ Legal Allocate the cost of the service departments to the operating divisions using the direct method. Note: Amounts to be deducted should be indicated by minus sign. Legal 0 $ Eastern $ 160,000 0 $ 40 Western Eastern 120 5,400 $ 1,200,000 0 Western 40 1,800 $ 790,000

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.