## Budget Allocation and Cost Analysis for Houston Partners### OverviewHouston Partners provides management consulting services to government and corporate clients. The organization consists of two support departments—Administrative Services (AS) and Information Systems (IS)—and two operating departments—Government Consulting (GOVT) and Corporate Consulting (CORP).### Data TableThe table below provides the budgeted overhead costs before any interdepartmental cost allocations, along with the percentage of support work supplied by AS and IS:| | SUPPORT | OPERATING | ||----------------------|------------------|------------------------|----------|| | AS | IS | GOVT | CORP | Total || **Budgeted overhead costs** | $390,000 | $2,100,000 | $7,500,000 | $12,420,000 | $22,410,000 || **Support work supplied by AS** (budgeted head count) | 0 | 25% | 45% | 30% | 100% || **Support work supplied by IS** (budgeted computer time) | 10% | 0 | 36% | 54% | 100% |### Requirements1. **Allocate the two support departments' costs to the two operating departments using the following methods:** - **Direct method** - **Step-down method** (Allocate AS first) - **Step-down method** (Allocate IS first)2. **Compare and explain differences in the support-department costs allocated to each operating department.**3. **What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method?**### InstructionsFor a detailed understanding, consider intermediary calculations and round your final answers to the nearest dollar for balances. Gain insights into strategic cost management and support department cost allocations by exploring the application of different methods.This exercise will help enhance your understanding of cost allocation methodologies used in management consulting environments and develop analytical skills in financial data interpretation.

Answer 1 SUPPOSE AS COST =X IS COST = Y X = 390000+ 0.10Y EQUATION 1 Y = 3600000+0.20X…

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)a quarter of 2017, Houstin's cost records indicate the following: E (Click the icon to view the cost records.) Read the requirements. ..... - X interm balan Data table SUPPORT OPERATING AS IS GOVT CORP Total Budgeted overhead costs before any interdepartment cost allocations $ 390,000 $ 2,100,000 $ 7,500,000 $ 12,420,000 $ 22,410,000

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)a quarter of 2017, Houstin's cost records indicate the following: E (Click the icon to view the cost records.) Read the requirements. ..... - X interm balan Data table SUPPORT OPERATING AS IS GOVT CORP Total Budgeted overhead costs before any interdepartment cost allocations $ 390,000 $ 2,100,000 $ 7,500,000 $ 12,420,000 $ 22,410,000

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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