Boston Partners provides management consulting services to government and client

Question

Boston Partners provides management consulting services to government and clients. Boston 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, Boston's cost records indicate the tollowing corporate The two support departments' costs have been alocated to the two operating departments using the direct method and the step-down mothod (AS department first) and the step-down method (IS department first). The results of the allocations are as ollows (Click the icon to view the drect method) (Click the icon to view the step-down method (AS first)) ?(click the icon to view the cost records ) AS GOVTCORP Reciprocal Method Total Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs Allocation of IS costs Enter any number in the edit fields and then click Check Answer Check Answer Clear All

Explanation / Answer

1.a)First ,determine linear equation for each support deaprtment

AS=$300,000+.10 IS

IS=$3,000,000+.25 AS

ON SOLVING AS=$300,000+.10($3,000,000+.25 AS)

AS=$300,000+$300,000+.025AS

.975 AS= $ 600,000

AS=$615,385 AND PUTTING THIS VALUE WE GET IS=$3,153,846

B.REPEATED ITERATION

2.Begin by entering total support-departmental costs allocated to each operating department under each of the following methods:

The four methods differ in the level of support department allocation across supportdepartments. The step-down method partially recognizes services to other departments. The reciprocal methodrecognizes all the interactions and is thus the most accurate.

SUPPORT DEPARTMENTS OPERATING DEPARTMENTS TOTAL AS IS GOVT. CORP. BUDGETED OVERHEAD COSTS BEFORE INTERDEPARTMENT COST ALLOCATIONS 300,000 3,000,000 7,350,000 12,490,000 23,140,000 ALLOCATION OF AS COSTS (615,385) 153,846 276,923 184,616 ALLOCATION OF IS COSTS 315,385 (3,153,846) 851,538 1,986,923 TOTAL BUDGETED OVERHEADS OF OPERATING DEPARTEMENTS $0 $0 $8,478,461 $14,661,539 $23,140,000

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