2. Edgware Insight Edgware Insight provides outsourcing services and advice to both government and corporate clients. For costing purposes, Edgware Insight classifies its departments into two support departments (Administrative/ Human Resources and Information Systems) and two operating departments (Government Consulting and Corporate Consulting). For the first quarter of this year, Edgware Insight incurs the following costs in its four departments: 50,000 280,000 Administrative/Human Resources (A/HR) Information Systems (IS) Government Consulting (GOVT) Corporate Consulting (CORP) 875,600 1,245,200 The actual level of support relationships among the four departments for the first quarter of this year was: USED BY A/HR IS GOVT CORP A/HR 35% 40% 25% SUPPLIED BY IS 20% 20% 60% The Administrative/Human Resource support percentages are based on headcount. The Information Systems support percentages are based on actual hours of computer time used. Required: 1. Allocate the two support department costs to the two operating departments using the following methods: (a) Direct method (b) Step-down method (allocate Administrative/Human Resources first) (c) Step-down method (allocate Information Systems first). Compare and explain the differences in the support department costs allocated to each operating department 2. What criteria could determine the sequence for allocating support departments using the step-down method? What criterion should Edgware Insight use if government consulting jobs require the step-down method for tendering purposes? 3. Why ventional product costing systems allocate support department costs first to the operating departments before assigning them to individual jobs? Clearly show your workings