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. First, determine the linear equations for each support department. AS= IS= Data table 1 A B SUPPORT AS IS D E F OPERATING GOVT CORP Total | 2 Budgeted overhead costs before any 3 interdepartment cost allocations Support work supplied by AS 4 (budgeted head count) Support work supplied by IS 5 (budgeted computer time) $ 600,000 $6,000,000 $ 8,675,000 $ 12,420,000 $ 27,695,000 0 20% 48% 32% 100% 10% 0 27% 63% 100% Direct method Direct Method Support Departments Operating Departments AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 600,000 $ 6,000,000 $ 8,675,000 $ 12,420,000 $ 27,695,000 Allocation of AS costs (600,000) 360,000 240,000 Allocation of IS costs (6,000,000) 1,800,000 4,200,000 $ 0 $ Total budgeted overhead of operating departments 0 $ 10,835,000 $ 16,860,000 $27,695,000 il Print Done Step-down method (AS first) Step-down Method Support Departments Operating Departments AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ Allocation of AS costs 120,000 600,000 $6,000,000 $ 8,675,000 $ (600,000) 12,420,000 $ 27,695,000 288,000 192,000 $ 0 6,120,000 Allocation of IS costs Total budgeted overhead of operating departments (6,120,000) 1,836,000 4,284,000 $ 0 $ 10,799,000 $ 16,896,000 $ 27,695,000 Step-down method (IS first) Step-down Method Support Departments Operating Departments AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ Allocation of IS costs 600,000 $ 6,000,000 $ 8,675,000 $ 12,420,000 $ 27,695,000 600,000 (6,000,000) 1,620,000 3,780,000 0 $ 1,200,000 Allocation of AS costs (1,200,000) 720,000 480,000 $ 0 $ 11,015,000 $ 16,680,000 $ 27,695,000 Total budgeted overhead of operating departments Print Done - Reference Direct method Step-down (AS first) Step-down (IS first) Requirements GOVT CORP 2,160,000 $ 4,440,000 Allocate the two support departments' costs to the two operating departments using the reciprocal method. Use (a) linear equation and (b) repeated iterations. 2,124,000 2,340,000 4,476,000 4,260,000 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? Print Done Print Done -