Question
Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departmentslong dashadministrative services (AS) and information systems (IS)long dashand two
Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departmentslong dashadministrative services (AS) and information systems (IS)long dashand two operating departmentslong dashgovernment consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following:
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 |
Data Table SUPPORT AS OPERATING GOVT CORP IS 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) - 25% 40% 35% 100% 10% - 30% 60% 100% Support Departments Operating Departments Direct Method AS IS GOVI CORP Total Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs Allocation of IS costs Total budgeted overhead of operating departments
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