Section 1: Chapter 7 – (required, 20%) MMG Global features 4…

Section 1: Chapter 7 – (required, 20%) MMG Global features 4 departments: Travel Trade Media (TTM), Tourism Marketing Services (TMS), Human Resources (HR), and Accounting.  HR & Accounting are support departments, while TTM and TMS are operating departments.  Number of personnel per department provides a reasonable allocation basis for HR, while accounting is allocated based on accountant hours used by each department.  Budgeted costs and basis-usage is reported below:   Accounting HR TMS TTM budgeted costs        2,000,000        1,500,000   20,000,000   12,000,000 # of personnel                    20                    40               140               100 accounting hours used               5,000               5,000          18,000          12,000     Please allocate MMG’s total costs to the 4 departments, using: Question 1) The direct method Question 2) The step down method, removing Accounting first   Question 3) What 2 formulas would be used in the reciprocal method?