Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments---administrative services (AS) and information system (IS)---and two operating departments---government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following:

	SUPPORT			OPERATING
	AS	IS		GOVT	CORP	Total
Budgeted overhead costs before any
interdepartment cost allocations	$600,000	$2,400,000		$8,756,000	$12,452,000	$24,208,000
Support work supplied by AS
(budgeted head count)	---	25%		40%	35%	100%
Support work supplied by IS
(budgeted computer time)	10%	---		30%	60%	100%

1.	Allocate the two support departments' costs to the two operating departments using the following methods:
	a.	Direct method
	b.	Step-down method (Allocate AS first)
	c.	Step-down method (Allocate IS first)
2.	Compare and explain differences in the support-department costs allocated to each operating department.
3.	What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method?