Concord Partners provides management consulting services to government and corporate clients. Concord 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 2020, Concord's cost records indicate the following: (Click the icon to view the cost records.) Read the requirements. 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.) Requirement 1a. Allocate the two support departments' costs 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 "O" for any zero balances.) Reciprocal Method Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs Allocation of IS costs Total budgeted overhead of operating departments Support Departments Operating Departments AS IS GOVT CORP Total Step-down method (IS first) Step-down Method Budgeted overhead costs before interdepartment cost allocations Allocation of IS costs Support Departments Operating Departments AS IS GOVT CORP Total $ 300,000 $3,000,000 $8,750,000 $ 12,540,000 $ 24,590,000 300,000 (3,000,000) 1,890,000 Allocation of AS costs Total budgeted overhead of operating departments 69 $ 600,000 (600,000) 810,000 0 360,000 240,000 $ 9,920,000 $ 14,670,000 $ 24,590,000 Step-down method (AS first) Step-down Method Support Departments Operating Departments AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 300,000 $3,000,000 $8,750,000 $ 12,540,000 $ 24,590,000 Allocation of AS costs (300,000) 75,000 135,000 90,000 $ 3,075,000 Allocation of IS costs (3,075,000) 922,500 2,152,500 $ 0 $ 9,807,500 $ 14,782,500 $ 24,590,000 Total budgeted overhead of operating departments Reference Direct method Step-down (AS first) Step-down (IS first) GOVT CORP $ 1,080,000 $ 2,220,000 1,057,500 2,242,500 1,170,000 2,130,000 Direct method Support Departments Operating Departments AS IS GOVT CORP Total Direct Method Budgeted overhead costs before interdepartment cost allocations $ 300,000 $3,000,000 $8,750,000 $ 12,540,000 $ 24,590,000 Allocation of AS costs (300,000) 180,000 120,000 Allocation of IS costs (3,000,000) 900,000 2,100,000 $ 0 $ 0 $ 9,830,000 $ 14,760,000 $ 24,590,000 Total budgeted overhead of operating departments Requirements 1. Allocate the two support departments' costs to the two operating departments using the reciprocal method. Use (a) linear equation and (b) repeated iterations. 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? Data Table A B D E F 1 SUPPORT OPERATING 2 AS IS GOVT CORP Total Budgeted overhead costs before any $ 300,000 $3,000,000 $8,750,000 $ 12,540,000 $ 24,590,000 3 interdepartment cost allocations Support work supplied by AS 4 (budgeted head count) Support work supplied by IS 5 (budgeted computer time) 0 25% 45% 30% 100% 10% 0 27% 63% 100%