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: (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 support departments' costs to the two operating departments using the reciprocal method. First, determine the linear equations for each support department. Requirements AS IS= 1. Allocate the two support departments' costs to the two operating departments using the reciprocal method. Use (a) linear equation and (b) repeated iterations Compare and explain differences in requirement 1 with those of the direct method and the step down method. Which method do you prefer? Why? 2. Print Done Direct method Support Departments Operating Departments Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 12,470,000 $ 24,470,000 Allocation of AS costs 300,000 $3,000,000 $ 8,700,000 $ (300,000) 180,000 (3,000,000) 900,000 120,000 2,100,000 Allocation of IS costs $ 0 $ 0 $ 9,780,000 $ Total budgeted overhead of operating departments 14,690,000 $ 24,470,000 Question Help Step-down method (IS first) - tments' costs have been allocated to the two operating departments using the direct method and the department first) and the step-down method (IS department first). The results of the allocations are as Support Departments Operating Departments AS IS GOVT CORP Total Step-down Method Budgeted overhead costs before interdepartment cost allocations View the direct method.) View the step-down method (AS first).) View the step-down method (IS first).) View a summary of the three methods.) $ 12,470,000 $ 24,470,000 300,000 $ 300,000 3,000,000 $8,700,000 $ (3,000,000) 810,000 Allocation of IS costs 1,890,000 0 $ 600,000 (600,000) Allocation of AS costs 360,000 240,000 $ 0 Total budgeted overhead of operating departments $ 9,870,000 $ 14,600,000 $ 24,470,000 Print Done Support Departments Operating Departments AS IS GOVT CORP Total Step-down Method Budgeted overhead costs before interdepartment cost allocations $ 12,470,000 $ 24,470,000 Allocation of AS costs 90,000 300,000 $3,000,000 $ 8,700,000 $ (300,000) 75,000 135,000 0 3,075,000 (3,075,000) 922,500 $ Allocation of IS costs 2, 152,500 $ Choose from any drop-down list and then click Check Answer. 0$ 9,757,500 $ 14,712,500 $ 24,470,000 Total budgeted overhead of operating departments xparts remaining Print Done i Reference GOVT CORP $ Direct method Step-down (AS first) Step-down (IS first) 1,080,000 $ 1,057,500 1,170,000 2,220,000 2,242,500 2,130,000 Print Done Data Table - A B D E F 1 SUPPORT OPERATING AS IS GOVT CORP Total $ 300,000 $ 3,000,000 $ 8,700,000 $ 12,470,000 $ 24,470,000 2 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 25% 45% 30% 100% 10% 0 27% 63% 100% Print Done