Global Corporation has two Operating Departments South Department and North Department Each operating department uses the services of the two support departments Data Analytics Department and IT Department In addition, the Data Analytics and IT Department use each others services Below are the data from last year Support Dept Operating Dept Budgeted overhead costs before any interdepartment cost allocations Data Analytics IT South North Total Support Work $400 000 $100 000 $550 000 $1 200 000 $2 250 000 Data Analytics Budgeted Salary for Data Analytics $50 000 $10 000 $40 000 $100 000 Percentage 50 10 40 100 IT Budgeted Salaty for IT $90 000 $60 000 $50 000 $200 000 Percentage 45 30 25 100 1 What is the total operational department overhead costs (South and North) after the costs of the Data Analytics and IT are allocated using a) Direct Method b) Step down Method (allocate Data Analytics first) c) Step down Method (allocate IT first) d) Reciprocal Method 2 Which method would you recommend the Global Corporation use to allocate support department costs Why

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Global Corporation has two Operating Departments: South Department and North Department. Each operating department uses the services of the two support departments: Data Analytics Department

Global Corporation has two Operating Departments: South Department and North Department. Each operating department uses the services of the two support departments: Data Analytics Department and IT Department. In addition, the Data Analytics and IT Department use each others services. Below are the data from last year:

	Support Dept.		Operating Dept.
Budgeted overhead costs before any interdepartment cost allocations	Data Analytics	IT	South	North	Total
Support Work:	$400.000	$100.000	$550.000	$1.200.000	$2.250.000
Data Analytics
Budgeted Salary for Data Analytics	-	$50.000	$10.000	$40.000	$100.000
Percentage	-	50%	10%	40%	100%
IT
Budgeted Salaty for IT	$90.000	-	$60.000	$50.000	$200.000
Percentage	45%	-	30%	25%	100%

1. What is the total operational department overhead costs (South and North) after the costs of the Data Analytics and IT are allocated using a) Direct Method b) Step-down Method (allocate Data Analytics first) c) Step-down Method (allocate IT first) d) Reciprocal Method 2. Which method would you recommend the Global Corporation use to allocate support department costs? Why?