Support department cost allocation; direct and step-down methods. Phoenix Consulting provides outsourcing services and advice to both government and corporate clients. For costing purposes, Phoenix classifies its departments into two support departments (Administrative/

Human Resources and Information $ystems) and two operating departments (Government Consulting and Corporate Consulting). For the first quarter of 2007, Phoenix incurs the following costs in its four departments:

Administrative/Human Resources (A/HR)

Information Systems (IS)

Government Consulting (GOVT)

Corporate Consulting (CORP)

$ 620,000

$ 2,420,000

$ 8,776,000

$12,472,000