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:

SUPPORT

PRODUCTION

$\backslash$table$[[,\backslash$table$[[$Materials$],[$Requisitions$],[($MR$)]],\backslash$table$[[$Utility$],[$Services$],[($US$)]],$Machining,Assembly,Total$],[\backslash$table$[[$Budgeted$],[$overhead costs$],[$before any inter$-],[$department cost$],[$allocations$]],$$$200,000,$$$1,000,000,$$$5,456,000,$$$7,458,000,$$$14,114,000$

Required:

$1.$ 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 method.

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

production department.

$3.$ What approaches might be used to decide the sequence in which to allocate support

departments when using the step$-$down method?