Direct and step-down allocation. E-books, an online book retailer, has two operating departments- corporate sales and consumer sales-and two support departments-human resources and information systems. Each sales department conducts merchandising and marketing operations independently. E-books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The following data are available for September 2017: Page Layout Data Home Insert Formulas Review View в SUPPORT ID OPERATING DEPARTMENTS DEPARTMENTS Corporate Consumer Sales Sales Human Information Resources Systems 3 Budgeted costs incurred before any interdepartment cost allocations Support work supplied by human 5 resources department Budgeted number of employees Support work supplied by information 7 systems department Budgeted processing time (in minutes) $72,700 $234,400 $998,270 $489,860 4 21 42 28 8. 320 1,920 1,600

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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.