Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehou Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $100,000 are allocated based on the number of computer log-on hours. The costs c operating departments Music and Books are $112,500 and $135,000, respectively. Data on budgeted varehouse-hours and number of computer log-on hours are as follows: Support Departments Production Departments Warehouse Data Center Music Books Department Department Budgeted costs Budgeted warehouse-hours $350,000 $100,000 $112,500 $135,000 NA 560 1100 1580 Number of computer hours 270 NA 870 1070

D1. Account

Classify the following costs as typically direct (D) or indirect (I): Project staff Audit and legal Utilities Rent Raw materials Training on equipment Project supplies Labor Administrative staff Miscellaneous office supplies Quality assurance IT department Scheduled maintenance Shared software packages

What are support departments, and why are their costs allocated to other departments? What process is used to allocate support department costs?