Requirements

1. Allocate the two support departments' costs to the two operating departments using the following methods:

1. Direct method
2. Step-down method (Allocate AS first)
3. Step-down method (Allocate IS first)
4. Compare and explain differences in the support-department costs allocated to each operating department.
5. What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method?

Houstin Partners provides management consulting services to government and corporate clients. Houstin 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, Houstin's

cost records indicate the following: