Houstin Partners provides management consulting services to government and corporate clients. Houstin has two support The two support departments' costs have been allocated to the two operating departments using the direct method and the departments-administrative services (AS) and information systems (IS)-and two operating departments-government step-down method (AS department first) and the step-down method (IS department first). The results of the allocations are as consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2020, Houstin's cost records indicate the following: follows: (Click the icon to view the cost records.) (Click the icon to view the direct method.) . . . . (Click the icon to view the step-down method (AS first).) Read the requirements (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. - X AS= Direct method IS= Support Departments Operating Departments Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 300,000 $ 3,000,000 $ 7,325,000 $ 12,490,000 $ 23, 115,000 Allocation of AS costs (300,000) 180,000 120,000 Allocation of IS costs (3,000,000) 900,000 2, 100,000 Total budgeted overhead of operating departments 0 $ 8,405,000 $ 14,710,000 $ 23,115,000 Choose from any drop-down list and then click Check Answer. Print Done Help Me Solve This e Text Pages Get More Help -Data Table OPERATING Budgeted overhead costs before any CORP Total 3 interdepartment cost allocations $ 300,000 $ 3,000,000 $ 7,325,000 $ 12,490,000 $ 23,115,000 Support work supplied by AS 4 (budgeted head count] 0 25% 45% 30% 100% Support work supplied by IS (budgeted computer time} 10% 0 2?% 63% 100% Step-down method (AS rst) two supp down m- ws: (Click the (Click the (Click the (Click the Support Departments Operating Departments Total budgeted overhead of operating departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 300,000 $ 3,000,000 315 1325000 $ 12,490,000 315 23,115,000 Allocation ofAS costs w 75300 135,000 90,000 $ 0 3,075,000 Allocation of IS costs (3,075,000) 922,500 2,152,500 $ 0 $ 8,382,500 $ 14,732,500 $ 23,115,000 Houstin Partners proVides management consulting services to government and corporate clients. Houstin has two support The two support departments' costs have been allocated to the two operating departments using the direct method and the departmentsadministrative services (AS) and Information systems (lS)and two operating departmentsgovernment slepoown method (AS department rst) and the stepeoown method (IS department rst). The results 0! the allocations are as consulting (GOVT) and corporate consulting (CORP) For the rstquarter of 2020. Houstin's cost records indicate the foilowmg' follows: a (Click the icon to View the cost records.) a (Click the icon to View the direct method ) Read the requirements 5 (Click the icon to View the stepoown method (AS rst) ) i 5 (Click the icon to View the stepdown method (IS rst\" a (Click the icon to View a summary of the three methods.) I - Requirement to. Allocate the two support departmenls' costs to the two operating departments using the reciprocal method. Reference X First, determine the linear equations for each support department. A5: + GOVT CORP Direcl method $ 1050000 :5 2220000 ' Steprdown (AS rst) 1057,500 2242,500 Stepdown method ('3 rst) - Step-down (is first) 1.170000 2.130000 Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartmenl cost allocations $ 300,000 Eli $000,000 $ 7325000 $ 12400000 $ 23,115,000 Allocation of IS costs w w 310,000 1390000 $ 600,000 ; Ch Allocation of AS costs M w w $ 0 55 8.495000 55 14620000 $ 23,115,000 Total budgeted overhead of operating departments
