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Question 3 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 (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following: SUPPORT OPERATING AS IS GVT CORP TOTAL Budgeted overhead costs $600,000 $2,400,000 $8,756,000 $12,452,000 $24,208,000 before any inter-department cost allocations Support work supplied by 25% 40% 35% 100% AS (budgeted head count) Support work supplied by 10% IS (budgeted time) computer 30% 60% 100% Required: 1. Allocate the two support departments' costs to the two operating departments using the following methods: a. Direct method b. Step-down method (allocate AS first) c. Step-down method (allocate IS first) 2. Compare and explain differences in the support-department costs allocated to each operating department.

Question 3 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 (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following: SUPPORT OPERATING AS IS GVT CORP TOTAL Budgeted overhead costs $600,000 $2,400,000 $8,756,000 $12,452,000 $24,208,000 before any inter-department cost allocations Support work supplied by 25% 40% 35% 100% AS (budgeted head count) Support work supplied by 10% IS (budgeted time) computer 30% 60% 100% Required: 1. Allocate the two support departments' costs to the two operating departments using the following methods: a. Direct method b. Step-down method (allocate AS first) c. Step-down method (allocate IS first) 2. Compare and explain differences in the support-department costs allocated to each operating department.

FINANCIAL ACCOUNTING
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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Question 3 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 (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following: SUPPORT OPERATING AS IS GVT CORP TOTAL Budgeted overhead costs $600,000 $2,400,000 $8,756,000 $12,452,000 $24,208,000 before any inter-department cost allocations Support work supplied by 25% 40% 35% 100% AS (budgeted head count) Support work supplied by 10% IS (budgeted time) computer 30% 60% 100% Required: 1. Allocate the two support departments' costs to the two operating departments using the following methods: a. Direct method b. Step-down method (allocate AS first) c. Step-down method (allocate IS first) 2. Compare and explain differences in the support-department costs allocated to each operating department.
Transcribed Image Text:Question 3 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 (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following: SUPPORT OPERATING AS IS GVT CORP TOTAL Budgeted overhead costs $600,000 $2,400,000 $8,756,000 $12,452,000 $24,208,000 before any inter-department cost allocations Support work supplied by 25% 40% 35% 100% AS (budgeted head count) Support work supplied by 10% IS (budgeted time) computer 30% 60% 100% Required: 1. Allocate the two support departments' costs to the two operating departments using the following methods: a. Direct method b. Step-down method (allocate AS first) c. Step-down method (allocate IS first) 2. Compare and explain differences in the support-department costs allocated to each operating department.
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