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How do you do direct method of cost allocation? How do you find the percentages...

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Accounting

How do you do direct method of cost allocation? How do you find the percentages and then what do you multiply those by? The following information is provided:

Also what are the calculations to find the stepdown method with Accounting for and then IM first? Clinic costs are reimbursed and Hopsital costs arent so we want to choose the option with the highest clinic costs.

image

Administrative Departments Accounting IM Total cost $3,800,000 $4,800,000 Allocation baseNumber of transactions Disk space (gigabytes) Service Levels Transactions Gigabytes Accounting 8 IM 40,000 Hospital 1,100,000 7 Clinic 600,000 Total 1,740,000 24

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