Problem 1 Caris Company is a manufacturer with two production departments (Machining and Assembly) as well as two support departments (Materials Requisitions and Utility Services). For the last quarter of 2020, Cariss cost records indicate the following: SUPPORT PRODUCTION Materials Requisitions (MR) Utility Services (US) Machining Assembly Total Budgeted overhead costs before any interdepartment cost allocations $400,000 $2,000,000 $9,456,000 $13,458,000 $25,314,000 Support work supplied by MR (Number of requisitions) 0 25% 40% 35% 100% Support work supplied by US (Power costs) 10% 0 30% 60% 100% Required: 1. Allocate the two support departments costs to the two operating departments using the following methods: a. Direct method (5 Marks) b. Step-down method (allocate MR first) (5 Marks) c. Step-down method (allocate US first) (5 Marks) d. The Algebraic/reciprocal method. (10 Marks)

2. Compare and explain differences in the support-department costs allocated to each production department. (20 Marks)

3. What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method? (15 Marks)