1. Looking to compare, thanks. A) Allocate the two support departments' costs to the two operating departments using...

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Accounting

1.
Looking to compare, thanks.
A) Allocate the two support departments' costs to the twooperating departments using the following methods?
Direct Method
Step-down method (Allocate AS first)
Step -down method (Allocate IS first)
B) Compare and Explain differences in the support departmentcosts allocated to each operating department?
C) What approaches might be used to decide the sequence in whichto allocate support departments when using the step-downmethod?
Support Operating
AS IS GOVT CORP Total
BudgetedOverhead Costs Before any
interdepartment cost allocations 600000 2400000 8756000 12452000 24208000
Supportwork supplied by AS
(budgetedhead count) 0 0.25 0.4 0.35 100%
Supportwork supplied by IS
(budgetedcomputer time) 0.1 0 0.3 0.6 100%

Answer & Explanation Solved by verified expert

4.5 Ratings (778 Votes)

Direct Method AS IS Govt Corp Costs 600000 2400000 Alloc of AS costs 4075 3575 600000 320000 280000 Alloc of IS costs 3090 6090 2 400000 800 000 1 600000 0 0 1 120000 1 880000 b StepDown AS first Costs 600000 2400000 Alloc of AS costs 025 040 035 600000 150000 240000 210000 Alloc of IS costs 3090 6090 2 550000 850 000 1 700000 0 0 1 090000 1 910000 c StepDown IS first Costs See Answer

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	Support		Operating
	AS	IS	GOVT	CORP	Total
BudgetedOverhead Costs Before any
interdepartment cost allocations	600000	2400000	8756000	12452000	24208000
Supportwork supplied by AS
(budgetedhead count)	0	0.25	0.4	0.35	100%
Supportwork supplied by IS
(budgetedcomputer time)	0.1	0	0.3	0.6	100%