Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments-administrative services (AS) and information systems (IS)and two operating departments-government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2020, Phoenix's cost records indicate the following: - x Data table A B. D E F 1 SUPPORT OPERATING 2 AS IS GOVT CORP Total $ 690,000 $ 3,000,000 $ 8,825,000 $ 12,490,000/ $ 25,005,000 Budgeted overhead costs before any 3 interdepartment cost allocations Support work supplied by AS 4 (budgeted head count) Support work supplied by IS 5 (budgeted computer time) 0 20% 52% 28% 100% 10% 0 36% 54% 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? Requirement 1a. Allocate the two support departments' costs to the two operating departments using the direct method. (Do not round intermediary calculations and round your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances.) Support Departments Operating Departments Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 630,000$ 3,000,000 $ 8,675,000 $ 12,450,000 $ 24,755,000 Allocation of AS costs (630,000) 378,000 252,000 Allocation of IS costs (3,000,000) 900,000 2,100,000 $ Total budgeted overhead of operating departments O'$ o'$ 9,953,000 $ 14,802,000 $24.755,000 Requirement 1b. Allocate the two support departments' costs to the two operating departments using the step-down method (Allocate AS first). (Do not round intermediary calculations and round your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances.) Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs $ 630,000$ 3,000,000 $ 8,675,000 $ 12,450,000 $ 24,755,000 (630,000) 126,000 302,400 201,600 3,126,000 Allocation of IS costs (3,126,000) 937,800 2,188,200 $ 0$ 9,915,200 $ 14,839,800 $24.755,000 Total budgeted overhead of operating departments Requirement 1c. Allocate the two support departments' costs to the two operating departments using the step-down method (Allocate is first). (Do not round intermediary calculations and round your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances.) Support Departments Operating Departments AS IS GOVT CORP Total Step-down Method Budgeted overhead costs before interdepartment cost allocations Allocation of IS costs $ 630,000 $ 3,000,000 $ 8,675,000 $ 12,450,000 $24.755,000 300,000 (3,000,000) 810,000 1,890,000 0 $ 930,000 Allocation of AS costs (930,000) 558,000 372,000 $ $ 10,043,000 $ 14,712,000 $24.755,000 Total budgeted overhead of operating departments Requirement 2. Compare and explain differences in the support-department costs allocated to each operating department. Begin by entering the total support-department costs allocated to each operating department under each of the methods below. CORP GOVT 1,278,000 $ Direct method $ Step-down (AS first) Step-down (IS first) 1,240,2009 1,368,000 2,352,000 2,389,800 2,262,000 The direct method ignores any services to other support departments . The step-down method partially recognizes services to other departments There is a disproportionate usage of IS services by CORP. Therefore, when AS costs are allocated first it results in the highest overall allocation to CORP. Similarly, GOVT.'s usage of the AS group exceeds CORP's. Therefore, when AS costs are allocated second it results in assigning relatively more costs to GOVT. Requirement 3. What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method? (If an input field is not used in the table, leave the input field empty, do not select a label.) The approaches that could determine the sequence in the step-down method are: Allocate support departments on a ranking of the percentage of their total services provided to other support departments. Allocate support departments on a ranking of the total dollar amount in the support departments. Allocate support departments on a ranking of the total dollar amounts of services provided to other support departments