Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments-administrative services (AS) and information systems (13)-and two operating departments-government

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments-administrative services (AS) and information systems (13)-and two operating departments-government consulting (GOVT) and corporate consulting (CORP). For the first quarter of the year, Phoenix's cost records indicate the following: 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 stap-down method (15 first)) Click the icon to view the step-down method (AS first)) (Click the icon to view a summary of the three methods) Required Requirement fa Alocate the two support departments' costs to the two operating departments using the reciprocal method First determine the linear equations for each support department AS= nage mme cost costs re as direc step amma two ations Data table Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) OPERATING SUPPORT AS IS GOVT CORP Total $ 600,000 $2,400,000 $8,756,000 $ 12,452,000 $ 24,208,000 0 25% 40% 35% 100% 10% 0 30% 60% 100% Done Print - X - ation own Direct method Direct Method Budgeted overhead costs before interdepartment cost allocations $ Allocation of AS costs Allocation of IS costs Total budgeted overhead of operating departments Support Departments Operating Departments GOVT CORP AS IS Total 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$ 9,876,000 $ 14,332,000 $ 24,208,000 $ Print 0$ Done - X Step-down method (AS first) Step-down Method Budgeted overhead costs before interdepartment cost allocations S Allocation of AS costs $ Allocation of IS costs Total budgeted overhead of operating departments Print Support Departments Operating Departments GOVT AS IS CORP Total 600,000 $2,400,000 $8,756,000 $ 12,452,000 $ 24,208,000 (600,000) 150,000 240,000 210,000 0 2,550,000 (2,550,000) 850,000 1,700,000 0$ 9,846,000 $ 14,362,000 $ 24,208,000 $ Done X Reference Direct method Step-down (AS first) Step-down (IS first) $ Print GOVT 1,120,000 $ 1,090,000 1,168,000 Done CORP 1,880,000 1,910,000 1,832,000 . X I id ric tr at ie ic ic ca Step-down method (IS first) Step-down Method Budgeted overhead costs before interdepartment cost allocations $ Allocation of IS costs $ Allocation of AS costs Total budgeted overhead of operating departments S Print Support Departments Operating Departments GOVT AS IS CORP Total 600,000 $2,400,000 $8,756,000 $12.452.000 $ 24,208,000 240,000 (2,400,000) 720,000 1,440,000 $ 0 840,000 (840,000) 448,000 392,000 0 $ 9,924,000 $14,284,000 $ 24,208,000 Done I Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments-administrative services (AS) and information systems (13) and two) CD Requirement 1a. Alocate the two support departments' costs to the two operating departments using the reciprocal method First, determine the linear equations for each support department AS- 15- Now, allocate the support departments' costs (AS and IS department costs that you determined in the prior step) to the two operating departments using the reciprocal method. (Round decimal calculations to three decimal places, XXX, and your final answers to the nearest whole dollar Use parentheses or a minun sign when decreasing departments by alocating costs. Enter a "0" 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 15 costs Next Phoenix Partners provides management consulting services to govemment and corporate clients. Phoenix has two support departments-administrative services (AS) and information systems (15)-and two Allocation of IS costs Total budgeted overhead of operating departments Requirement 1b. Alocate the two support departments' costs to the two operating departments using the reciprocal method: Use repeated iterat parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances) Rerations. (Round your final answers to the nearest whole dollar Use Support Departments 15 Operating Departments GOVT Reciprocal Method AS CORP Total Budgeted overhead costs before interdepartment cost allocations First allocation of AS costs First allocation of IS costs Second allocation of AS costs Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments-administrative services (AS) and information systems (15)--and two COO Second allocation of 15 costs Third allocation of AS costs Third allocation of IS costs Fourth allocation of AS costs Fourth allocation of 15 costs Fifth allocation of AS costs Fifth allocation of IS costs Total budgeted overhead of operating departments Requirement 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? Begin by entering the total support-department costs allocated to each operating department under each of the methods below GOVT CORP Fifth allocation of IS costs Total budgeted overhead of operating departments Requirement 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? Begin by entering the total support-department costs allocated to each operating department under each of the methods below GOVT CORP Direct method Step-down (AS first) Step-down (IS first) Reciprocal The four methods differ in The step-down method recognizes all the interactions and is thus the most accurate. The

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Theory And Practice

Authors: Jerry R. Strawser, Robert H. Strawser, Roger H. Hermanson

9th Edition

0873939336, 9780873939331

More Books

Students also viewed these Accounting questions

Question

=+3. Who can provide information for evaluation?

Answered: 1 week ago