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Question 4 Total 25 marks Gambino Ltd is a business consultant firm that provides its service to its clients. Gambino Ltd has two support departments:
Question 4 Total 25 marks Gambino Ltd is a business consultant firm that provides its service to its clients. Gambino Ltd has two support departments: IT Support (IT) and Admin Support (Admin) department. In addition, Gambino has two operation departments namely: Retail sector and Manufacturing sector. For the next quarter, the budgeted cost and the percentage of work of the support department used by the other departments is available below: Support Department Operation Department IT Admin Retail Manufacturing Total 1,200,000 1,552,500 7,500,000 8,000,000 18,200,000 25% 40% 35% 100% Budgeted costs $ Support work supplied by IT Support work supplied by Admin 10% 30% 60% 100% Required (show your workings): 6 marks (a) Using the direct method, determine the amount of support department costs that will be allocated to the two operation departments (b) 7 marks Using the step-down method, determine the amount of support department costs that will be allocated to the two operation departments if the Admin department with the highest amount is allocated first. (c) ) Using the reciprocal method of linear equations, determine the amount of support 12 marks department costs that will be allocated to the two operation departments
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