Boston Partners provides management consulting services to government and corporate clients. Boston has two support departmentsadministrative services (AS) and information systems (IS) and two operating departments-government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Boston's cost records indicate the following: The two suppo and the step-da allocations are (Click the i - lk the i Data table k the i lk the i SUPPORT OPERATING AS IS GOVT CORP Total $ 390,000 $ 3,600,000 $ 7,350,000 $ 12,450,000 $ 23,790,000 Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) 0 20% 48% 32% 100% 10% 0 36% 54% 100% Direct method Support Departments Operating Departments Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ Allocation of AS costs 390,000 $ 3,600,000 $ 7,350,000 $ 12,450,000 $ 23,790,000 (390,000) 234,000 156,000 (3,600,000) 1,440,000 2,160,000 Allocation of IS costs $ 0 $ 0 $ 9,024,000 $ 14,766,000 $ 23,790,000 Total budgeted overhead of operating departments Step-down method (AS first) Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 12,450,000 $ 23,790,000 390,000 $ 3,600,000 $ 7,350,000 $ (390,000) 78,000 187,200 Allocation of AS costs 124,800 $ 0 3,678,000 (3,678,000) Allocation of IS costs 1,471,200 2,206,800 $ 0 $ 9,008,400 $ 14,781,600 $ 23,790,000 Total budgeted overhead of operating departments Step-down method (IS first) Support Departments Operating Departments AS IS GOVT CORP Total Step-down Method Budgeted overhead costs before interdepartment cost allocations $ 390,000 $3,600,000 $ 7,350,000 $ 12,450,000 $ 23,790,000 360,000 (3,600,000) 1,296,000 1,944,000 Allocation of IS costs 0 $ 750,000 (750,000) Allocation of AS costs 450,000 300,000 $ 0 $ 9,096,000 $ Total budgeted overhead of operating departments 14,694,000 $ 23,790,000 Requirement 1a. Allocate the two support departments' costs to the two operating departments using the reciprocal method. First, determine the linear equations for each support department. AS= + IS= 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. (Round decimal calculations to three decimal places, XXX, and your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances.) Support Departments Operating Departments AS IS GOVT CORP Total Reciprocal Method 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. (Round your final answers to the nearest whole dollar. when decreasing departments by allocating costs. Enter a "0" for any zero balances.) Support Departments Operating Departments AS IS GOVT CORP Total Reciprocal Method Budgeted overhead costs before interdepartment cost allocations First allocation of AS costs First allocation of IS costs Second allocation of AS costs Second allocation of IS costs Third allocation of AS costs Third allocation of IS costs Fourth allocation of AS costs Fourth allocation of IS costs Fifth allocation of AS costs Fifth allocation of IS costs Total budgeted overhead of operating departments Requirement 2. Compare and explain differences in requirement 1 with those of the direct method and the step down method. Which method do you prefer? Why? Begin by entering the total support-department costs allocated to each operating department under each of the methods below. GOVT CORP Direct method Step-down (AS first) Step-down (IS first) Reciprocal The four methods differ in The step-down method The recognizes all the interactions and is thus the most accurate