Question

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 RP). For the first quarter of 2017, Phoenix's cost records indicate the following: (Click the icon to view the cost records.) (CORP). Po Read the requirements. Requirement 1a. Allocate the two support departments' costs to the two operating departments using the direct method. (Do not round intermediary calculations and round 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 Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs Allocation of IS costs Total budgeted overhead of operating departments

Answer 1

Answer is given below

For Q.No.2 and 3 need drop down boxes answers available to answer the same exactly

1 a) Direct method Support Departments AS IST $660,000 $3,000,000 Operating Departments GOVT CORP Total $8,850,000 $12,550,000 $21,400,000 Budgeted Overhead Costs Allocation Allocation of AS Costs (Ratio of 52:28) Allocation of Is Costs (Ratio of 27:63) Total Budgeted overhead of Operating Department $660,000 -$3,000,000 $0 $429,000 $231,000 $0 $3,000,000 $9,279,000 $15,781,000 $25,060,000 $0 1b) Step-down method (Allocate As first) Support Departments AS IS $660,000 $3,000,000 Operating Departments GOVT CORP Total $8,850,000 $12,550,000 $21,400,000 Budgeted Overhead Costs Allocation Allocation of AS Costs ( Ratio of 20:52:28) Allocation of IS Costs (Ratio of 27:63) Total Budgeted overhead of Operating Department -$660,000 $132,000 $3,132,000 $0 $343,200 $939,600 $10,132,800 $184,800 $2,192,400 $14,927,200 $25,060,000 $0 1 c) Step-down method (Allocate is first) Support Departments ASIS $660,000 $3,000,000 Operating Departments GOVT I CORP Total $8,850,000 $12,550,000 $21,400,000 Budgeted Overhead Costs Allocation Allocation of Is Costs (Ratio of 10:27:63) Allocation of AS Costs ( Ratio of 52:28) Total Budgeted overhead of Operating Department $300,000 -$960,000 $3,000,000 $810,000 $1,890,000 $624,000 $336,000 $0 $10,284,000 $14,776,000 $25,060,000 so Direct method Step-down (AS first) Step-down (IS first) GOVT $9,279,000 $10,132,800 $10,284,000 CORP $15,781,000 $14,927,200 $14,776,000 Direct method of overhead allocation allocates cost directly to operating departments without allocating to service department In step method of overhead allocation Cost of service department is allocated by step whereby allocation starts from one service department to other departments in sequence 3 Approaches to allocated overheads in sequence Service department which renders highest service to other service department can be allocated first Service department which has highest overheads can also be allocated first Usually first approach is preferred service department which renders highest service)