16-36. SUPPORT-DEPARTMENT COST ALLOCATIONS; DIRECT, STEP-DOWN, AND RECIPROCAL METHODS. Ballantine Corporation has two operating departments: Eastern Department and Western Department. Each of the operating departments uses the services of the company's two support departments: Engineering and Information Technology. Additionally, the Engineering and Information Technology departments use the services of each other. Data concerning the past year are as follows: Support Departments Operating Departments Western Budgeted overhead costs before Information Engineering Technology $300,000 $250,000 Eastern Department Department Total $650,000 $920,000 $2,120,000 any interdepartment cost allocations Support work furnished: By Engineering Budgeted Engineering salaries Percentage By Information Technology Budgeted IT service hours 450 Percentage 15% $ 60,000 30% $ 50,000 $ 90,000 $ 200,000 25% 45% 100% 1,500 1,050 3,000 50% 35% 100% Required 1. What are the total overhead costs of the operating departments (Eastern and Western) after the support-department costs of Engineering and Information Technology have been allocated using (a) the direct method, (b) the step-down method (allocate Engineering first), (c) the step-down method (allocate Information Technology first), and (d) the reciprocal method? 2. Which method would you recommend that Ballantine Corporation use to allocate service-department costs? Why