Consulting Accounting Department $20,00 Legal Department $30,000 OC EC 2 Departmental costs before allocation Proportion of Accounting Department services used Proportion of Legal Department services used 20% 60% 20% 50% Having completed the first month's activity, the partners are ready to evaluate the performance of the group and of the individual areas Required: 1. Prepare an income statement for DC and EC using the direct allocation method. Income Statements Design Engineering Consulting Consulting Revenue Costs Allocated costs Net income (ossi $ s 2. Prepare an income statement for DC and EC using the the step-down method Income Statements Design Engineering Consulting Consulting Revenue Costs Alocated costs Net Income 5 $ 3. Recommend one of the two methods to the partners and justify your choice Step-down method Direct allocation method At the end of last yeac a group of architects and engineers in South B.C.decided to join efforts in providing one-stop design and engineering consulting services to the construction industry The founding partners decided to divide the operation into three parts: the Consulting Department, the Legal Department, and the Accounting Department The conturing department dels directly with the clients, providing two somewost distinct services, design consulting (DC) and engineering consuming (Eints first full month of operations, the consulting department incurred costs of $40,000, with 40% attributed to design consultations and 60s to engineering consultations. Brings to clients amounted to $80,000 and $51.000 for design and engineering consultations, respectvely. This department made use of the other two departments services in preparing work for the external clients The accounting and legal departments also provided professional services for each other and for the two consulting departments on the basis of time according to the following schedule Consulting acting Legal 32. Departatal costs before allocate Properti Accounting Departat cos to Le port service 201 Having completed the first month's activity, the partners are ready to evaluate the performance of the group and of the individual areas Required: 1. Prepare an income statement for DC and EC using the direct allocation method Des Coming Costa Abad einem 1 os 2. Prepare an income statement for DC and EC using the the step-down method Income tante Desig Engine Consi Pune 3. Recommend one of the two methods to the partners and four choice