A B D E F. 1 SUPPORT OPERATING Manhattan Partners provides management consulting services to government and corporate clients. Manhattan has two support departments administrative services (AS) and information systems (IS)and two operating departmentsgovernment consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2020, Manhattan's cost records indicate the following: (Click the icon to view the cost records.) 2 AS IS GOVT CORP Total The two support departments' costs have been allocated to the two operating departments using the direct method and the step-down method (AS department first) and the step-down method (IS department first). The results of the allocations are as follows: (Click the icon to view the direct method.) (Click the icon to view the step-down method (AS first).) (Click the icon to view the step-down method (IS first).) (Click the icon to view a summary of the three methods.) $ 660,000 $ 3,900,000 $ 7,325,000 $ 12,550,000 $ 24,435,000 Budgeted overhead costs before any 3 interdepartment cost allocations Support work supplied by AS 4 (budgeted head count) Support work supplied by IS 5 (budgeted computer time) 0 20% 48% 32% Read the requirements. 100% 10% 0 27% 63% 100% Support Departments Operating Departments Support Departments Operating Departments Direct Method AS IS GOVT CORP Total Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations Budgeted overhead costs $ before interdepartment cost allocations $ Allocation of AS costs 660,000 $ 3,900,000 $ 7,325,000 $ 12,550,000 $ 24,435,000 (660,000) 396,000 264,000 (3,900,000) 1,170,000 2,730,000 660,000 $ 3,900,000 $ 7,325,000 $ 12,550,000 $ 24,435,000 (660,000) 132,000 316,800 211,200 Allocation of AS costs $ 0 Allocation of IS costs Total budgeted overhead of operating departments 4,032,000 (4,032,000) $ 0 $ 0 $ 8,891,000 $ 15,544,000 $ 24,435,000 1,209,600 2,822,400 Allocation of IS costs Total budgeted overhead of operating departments $ 0 $ 8,851,400 $ 15,583,600 $ 24,435,000 Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs GOVT CORP before interdepartment cost allocations $ 660,000 $ 3,900,000 $ 7,325,000 $ 12,550,000 $ 24,435,000 390,000 (3,900,000) 1,053,000 2,457,000 Direct method $ 2,994,000 Allocation of IS costs 0 1,566,000 $ 1,526,400 1,683,000 3,033,600 $ Step-down (AS first) Step-down (IS first) 1,050,000 (1,050,000) 630,000 420,000 2,877,000 Allocation of AS costs Total budgeted overhead of operating departments $ 0 $ 9,008,000 $ 15,427,000 $ 24,435,000 Total Requirement 1a. Allocate the two support departments' costs to the two operating departments using the reciprocal method. Support Departments Operating Departments Reciprocal Method AS IS GOVT CORP Budgeted overhead costs before interdepartment cost allocations ? ? ? Allocation of AS costs ? ? ? ? Allocation of IS costs ? ? ? ? Total budgeted overhead of operating departments ? ? ? ? ? ? ? ? Requirement 1b. Allocate the two support departments' costs to the two operating departments using the reciprocal method. Use repeated iterations. Support Departments AS IS Operating Departments GOVT CORP Total Reciprocal Method Budgeted overhead costs before interdepartment cost allocations 1st allocation of AS costs ? ? ? ? ? ? ? ? ? ? ? ? ? 1st allocation of IS costs 2nd allocation of AS costs 2nd allocation of IS costs ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 3rd allocation of AS costs 3rd allocation of IS costs 4th allocation of AS costs 4th allocation of IS costs 5th allocation of AS costs 5th allocation of IS costs Total budgeted overhead of operating department ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Requirement 2. Compare and explain differences in requirement 1 with those of the direct method and the step down method. Begin by entering the total support department costs allocated to each operating department under each of the method below. CORP GOVT ? ? ? ? Direct method Step down (AS 1st) Step down (IS 1st) Reciprocal