Austin Partners provides management consulting services to government and corporate clients. Austin has two support departments administrative services (AS) and information systems

(IS) and two operating departments government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017.

Requirement 2. Compare and explain differences in the support-department costs allocated to each operating department.

Begin by entering the total support-department costs allocated to each operating department under each of the methods below.

Support Departments Operating Departments Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 600,000 $ 2,400,000 $ 8,650,000 $ 12,550,000 $ 24,200,000 Allocation of AS costs (600,000) 360,000 240,000 Allocation of IS costs (2,400,000) 960,000 1,440,000 0 $ 9,970,000 $ 14,230,000 $ 24,200,000 Total budgeted overhead of operating departments Requirement 1b. Allocate the two support departments' costs to the two operating departments using the step-down method (Allocate AS first). Enter a "0" for any zero balances.) Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 600,000 $ 2,400,000 $ 8,650,000 $ 12,550,000 $24,200,000 Allocation of AS costs (600,000) 120,000 288,000 192,000 2,520,000 Allocation of IS costs (2,520,000) 1,008,000 1,512,000 0 $ 9,946,000 $ 14,254,000 $ 24,200,000 Total budgeted overhead of operating departments Support Departments AS IS Operating Departments GOVT CORP Total Step-down Method Budgeted overhead costs before interdepartment cost allocations Allocation of IS costs $ $ 600,000 $ 2,400,000 $ 8,650,000 $ 12,550,000 $24,200,000 240,000 (2,400,000) 864,000 1,296,000 840,000 (840,000) 504,000 336,000 $ 10,018,000 $ 14,182,000 $ 24,200,000 Allocation of AS costs Total budgeted overhead of operating departments * Data Table SUPPORT OPERATING AS IS GOVT CORP Total $ Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) 600,000 $ 2,400,000 $ 8,650,000 $ 12,550,000 $ 24,200,000 0 20% 48% 32% 100% 10% 0 36% 54% 100% GOVT CORP Direct method Step-down (AS first) Step-down (IS first)