X Question Help Data Table Reference The step he direct method and the ults of the allocations are as follo SUPPORT OPERATING GOVT CORP AS IS GOVT CORP Total Direct method $ 2,220,000 1,080,000 $ 1,057,500 1,170,000 2,242,500 $ Step-down (AS first) Step-down (IS first) 300,000 $ 3,000,000 $ 7,350,000 $ 12,490,000 $ 23,140,000 2.130,000 Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) 0 25% 45% 30% 100% 10% 0 27% 63% 100% Print Done X Step-down method (AS first) Direct method Support Departments Operating Departments Support Departments Operating Departments Step-down Method AS IS GOVT CORP Total Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs $ 300,000 $ (300,000) Allocation of AS costs 3,000,000 $ 7,350,000 $ 12,490,000 $ 23,140,000 180,000 120,000 (3,000,000) 900,000 2,100,000 0 $ 8,430,000 $ 14,710,000 $ 23,140,000 300,000 $ 3,000,000 $ 7,350,000 $ 12,490,000 $ 23,140,000 (300,000) 75,000 135,000 90,000 0 3,075,000 (3,075,000) 922,500 2.152,500 $ Allocation of IS costs 0 $ Total budgeted overhead of operating departments Allocation of IS costs Total budgeted overhead of operating departments $ 0 $ 8,407,500 $ 14,732,500 $ 23,140,000 Print Done Print Done Clea remaining 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. AS $300,000+ 0.10 IS IS $3,000,000 + 0.25 AS 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 minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances) Support Departments Operating Departments AS IS GOVT CORP Total Reciprocal Method Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs $ 184,616 300,000 $ 3,000,000 $ 8,675,000 $ 12,470,000 $ 24,445,000 (615,385) 153,846 276,923 315,385 (3,153,846) 851,538 1,986,923 O $ 9,803,461 $ 14,641,539 $ 24,445,000 Allocation of IS costs Total budgeted overhead of operating departments 92,250 Requirement 1b. Allocate the two support departments' costs to the two operating departments using the reciprocal method. Use repeated iterations (Round your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "O" for any zero balances.) Support Departments Operating Departments Reciprocal Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations $ 300,000's 3,000,000 S 8,675,000 $ 12,470,000 $ 24.445,000 First allocation of AS costs (300,000) 75,000 135 000 90,000 3,075,000 First allocation of IS costs 307,500 (3,075,000) 830,250 1,937,250 Second allocation of AS costs (307,500) 76,875 138,375 Second allocation of IS costs 7,688 (76,875) 20,756 48,431 Third allocation of AS costs (7,688) 1,922 3,460 2,306 Third allocation of IS costs 192 (1,922) 519 1.211 Fourth allocation of AS costs (192) 48 86 58 Fourth allocation of IS costs (48) 13 30 Fifth allocation of AS costs (5) 1 2 2 Fifth allocation of IS costs (1) Total budgeted overhead of operating departments $ 9,803,461' $ 14,641,539 $ 24,445.000 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 $ 1,080,000 $ 2,220,000 Step-down (AS first) 1,057,500 2,242,500 Step-down (IS first) 1,170,000 2,130,000 Reciprocal 1,128.461 2,171,539 5 The four methods differ in the level of support department allocation across support departments The step-down method partially recognizes services to other departments The reciprocal method recognizes all the interactions and is thus the most accurate