Manhattan Partners provides management consulting services to government and corporate clients. Manhattan has two supportdepartments administrative services (AS) and information systems (IS)-and two operating departments-government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017,Manhattan's cost records indicate the following:(Click the icon to view the cost records.)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.)Operating DepartmentsSupport DepartmentsASGOVTCORPDirect MethodBudgeted overhead costsbefore interdepartment cost allocationsAllocation of AS costsBudgeted overhead costs before anyinterdepartment cost allocationsSupport work supplied by AS(budgeted head count)Support work supplied by IS(budgeted computer time)IS$ASSUPPORT0IS10%25%Total0OPERATING630,000 $1,800,000 $7,500,000 $ 12,470,000 $ 22,400,000GOVT45%CORP36%30%Total54%100%100%1. Allocate the two support departments' costs to the two operating departmentsusing the following methods:a. Direct methodb. Step-down method (Allocate AS first)C. Step-down method (Allocate IS first)2. Compare and explain differences in the support-department costs allocated toeach operating department.3. What approaches might be used to decide the sequence in which to allocatesupport departments when using the step-down method? 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 wholedollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances.)Support DepartmentsASOperating DepartmentsGOVTCORPDirect MethodBudgeted overhead costs.before interdepartment cost allocationsAllocation of AS costsAllocation of IS costsTotal budgeted overhead of operating departmentsRequirement 1b. Allocate the two support departments' costs to the two operating departments using the step-down method (Allocate AS first). (Do not round intermediary calculations and round your finalanswers 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 DepartmentsOperating DepartmentsStep-down MethodBudgeted overhead costsbefore interdepartment cost allocations.Requirement 1b. Allocate the two support departments' costs to the two operating departments using the step-down method (Allocate AS first). (Do not round intermediary calculations and round your finalanswers 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 DepartmentsASOperating Departments.CORPGOVTStep-down MethodBudgeted overhead costs.before interdepartment cost allocationsISTotal budgeted overhead of operating departmentsRequirement 1c. Allocate the two support departments' costs to the two operating departments using the step-down method (Allocate IS first). (Do not round intermediary calculations and round your finalanswers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances.)Requirement 1c. Allocate the two support departments' costs to the two operating departments using the step-down method (Allocate IS first). (Do not round intermediary calculations and round your finalanswers 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 DepartmentsASOperating DepartmentsCORPGOVTDirect methodStep-down (AS first)Step-down (IS first)ISCORPThe direct methodCORP. Therefore, when AS costs are allocated first it results insecond it results in▼ to GOVT.Totalsecond it results inISTotal budgeted overhead of operating departmentsRequirement 2. Compare and explain differences in the support-department costs allocated each operating department.TotalRequirement 2. Compare and explain differences in the support-department costs allocated to each operating department.Begin by entering the total support-department costs allocated to each operating department under each of the methods below.GOVTThe step-down methodTotal. There is a disproportionate usage of IS services byto CORP. Similarly, GOVT.'s usage of the AS group exceeds CORP's. Therefore, when AS costs are allocatedRequirement 3. What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method? (If a box is not used in the table, leave the box empty; donot select a label.)to GOVT.Requirement 3. What approaches might be used t decide the sequence in which to allocate support departments when using the step-down method? (If a box is not used in the table, leave the box empty; donot select a label.)The approaches that could determine the sequence in the step-down method are:

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$ Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) AS SUPPORT 0 IS 10% 630,000 $1,800,000 $ 7,500,000 $ 12,470,000 $ 22,400,000 25% a. b. Step-down method (Allocate AS first) C. Step-down method (Allocate IS first) OPERATING 0 GOVT 45% CORP 36% 30% Total 54% 100% 100% 1. Allocate the two support departments' costs to the two operating departments using the following methods: Direct method

$ Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) AS SUPPORT 0 IS 10% 630,000 $1,800,000 $ 7,500,000 $ 12,470,000 $ 22,400,000 25% a. b. Step-down method (Allocate AS first) C. Step-down method (Allocate IS first) OPERATING 0 GOVT 45% CORP 36% 30% Total 54% 100% 100% 1. Allocate the two support departments' costs to the two operating departments using the following methods: Direct method

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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