15-20 Support-department cost allocation, reciprocal method (continuation of 15- 19). Refer to the data given in Exercise 15-19. 1. Allocate the two support departments' costs to the two operating departments using the reciprocal method. Use (a) linear equations and (b) repeated iterations. 2. Compare and explain differences in requirement 1 with those in requirement 1 of Exercise 15-19 Which method do you prefer? Why? Answer 1.a. First, determine the linear equations for each support department. AS $600,000+ 0.10 IS IS- $2,400,000+0.25 AS Now allocate the support departments costs (AS and IS department costs that you determined in the prior step) to the two operating departments using the reciprocal method. Support Departments Operating Departments AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs Allocation of IS costs Total budgeted overhead of operating departments $600,000 $2,400,000 $8,756,000 $12,452,000 $24,208,000 (861,538) 215,385 3 344,615 301,538 261,538 2.615,385)784,615 1,569,231 $0 S0 $9,885,231 $14,322,769 $24,208,000