Direct method Support Departments Operating Departments Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $600,000 $ 2,400,000 $ 8,756,000 $ 12,452,000 $ 24,208,000 (600,000) Allocation of AS costs Allocation of IS costs Total budgeted overhead of operating departments 320,000 2,400,000) 800 280,000 1,600,000 0 $ 9,876,000 $ 14,332,000 $ 24,208,000 0 $ PrintDone i Step-down method (AS first) Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 600,000 $ 2,400,000 $ 8,756,000 $ 12,452,000 $ 24,208,000 Allocation of AS costs (600,000) 150,000 240,000 210,000 0 2,550,000 (2,550,000) 850,000 1,700,000 Allocation of IS costs 0 $ 9,846,000 $ 14,362,000 $ 24,208,000 Total budgeted overhead of operating departments PrintDone i Step-down method (IS first) Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 600,000 $ 2,400,000 $ 8,756,000 $ 12,452,000 $ 24,208,000 Allocation of IS costs 240,000 (2,400,000) 720,000 1,440,000 0 840,000 (840,000) 0 448,000 392,000 Allocation of AS costs $ 9,924,000 $ 14,284,000 $ 24,208,000 Total budgeted overhead of operating departments Print Done 1 Reference GOVT CORP Direct method Step-down (AS first) Step-down (IS first) 1,120,000 $ 1,090,000 1,168,000 1,880,000 1,910,000 1,832,000 Print Done