Carica Company is a manufacturer with two production departments $($Machining and Assembly$)$ as well as two support departments $($Materials Requisitions and Utility Services$).$

For the last quarter of $2020,$ Carica$$s cost records indicate the following:

Materials

Requisitions $($MR$)$

Utility

Services $($US$)$

Machining

Assembly

Total

Budgeted overhead costs before any inter$-$ department cost

allocations

$$200,000$

$$1,000,000$

$$5,456,000$

$$7,458,000$

$$14,114,000$

Support work supplied by MR $($Number of

requisitions$)$

$0$

$25\%$

$40\%$

$35\%$

$100\%$

Support work

supplied by US $($Power costs$)$

$10\%$

$0$

$30\%$

$60\%$

$100\%$

Questions:

$1.$ Allocate the two support departments$$ costs to the two operating departments using the following methods:

a$.$Direct method.

b$.$ Step$-$down method $($allocate MR first$).$

c$.$ Step$-$down method $($allocate US first$)$

d$.$ The Algebraic

$2.$ Compare and explain differences in the support$-$department costs allocated to each production and make $6$ insight claims adequately supported by accurate, & relevant evidence while making reference to Question $1.$

$3.$ What $4$ approaches might be used to decide the sequence in which to allocate support departments when using the step$-$down method? Make references to Question $1$ when possible