Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departmentsadministrative services (AS) and information systems (IS)and two operating departmentsgovernment consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following: E (Click the icon to view the cost records.) The two support departments' costs have been allocated to the two operating departments using the direct method and the step-down method (AS department first) and the step-down method (IS department first). The results of the allocations are as follows: (Click the icon to view the direct method.) (Click the icon to view the step-down method (AS first).) (Click the icon to view the step-down method (IS first).) (Click the icon to view a summary of the three methods.) Read the requirements Requirement 1a Allocate the two suport denartments' costs to the two oneratina denartments using the reciprocal method Requirement 1a. Allocate the two support departments' costs to the two operating departments using the reciprocal method. First determine the line equations for each support department AS. 5600,000 + 0.10 IS 52.400,000 0.25 AS Now allocate the support departments' costs (AS and is department costs that you determined in the prior stap) to the two operating departments using the reciprocal method. (Round decimal calculations to three decimal places, XxOx, and your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs Enter a "for any zero balances) Support Departments Operating Departments Reciprocal Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs Allocation of Is costs Total budgeted overhead of operating departments Data Table SUPPORT OPERATING AS IS GOVT CORP Total $ 600,000 $ 2,400,000 $ 8,756,000 $ 12,452,000 $ 24,208,000 Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) 0 25% 40% 35% 100% 10% 0 30% 60% 100% Print Done * Reference - X CORP $ h Direct method Step-down (AS first) Step-down (IS first) GOVT 1,120,000 $ 1,090,000 1,168,000 1,880,000 1,910,000 1,832,000 Print Done - Direct method Support Departments Operating Departments AS IS GOVT CORP Total Direct Method Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs Allocation of IS costs Total budgeted overhead of operating departments 600,000 $ 2,400,000 $ 8,756,000 $ 12,452,000 $ 24,208,000 (600,000) 320,000 280,000 (2.400,000) 800.000 1,600,000 0$ 0$ 9,876,000 $ 14,332,000 $ 24,208,000 Print Done Step-down method (AS first) Support Departments AS IS Operating Departments GOVT CORP Total Step-down Method Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs $ $ 600,000 $ 2,400,000 $ 8,756,000 $ 12,452,000 $ 24,208,000 (600.000) 150,000 240,000 210,000 2.550,000 (2.550,000) 850,000 1.700.000 $ OS 9,845,000 $ 14,362,000 $ 24,208,000 Allocation of IS costs Total budgeted overhead of operating departments Print Done - X Step-down method (IS first) Support Departments AS IS Operating Departments GOVT CORP Total Step down Method Budgeted overhead costs before interdepartment cost allocations Allocation of IS costs $ $ 600,000 $ 2,400,000 $ 8.756,000 $ 12,452,000 $ 24,208,000 240.000 2.400.000) 720,000 1,440,000 840,000 (840,000) 448,000 392,000 0 $9.924,000 $ 14,284.000 $ 24,208,000 Allocation of AS costs Total budgeted overhead of operating departments Print Done i Requirements 1. Allocate the two support departments' costs to the two operating departments using the reciprocal method. Use (a) linear equation and (b) repeated iterations. 2. Compare and explain differences in requirement 1 with those of the direct method and the step down method. Which method do you prefer? Why? Print Done