Score: 0 of 30 pts 1 of 6 (0 complete) ? HW Score: 0%, 0 of 190 pts E15-19 (simi
ID: 2534621 • Letter: S
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Score: 0 of 30 pts 1 of 6 (0 complete) ? HW Score: 0%, 0 of 190 pts E15-19 (similar to) ? Question Help Austin Partners provides management consulting services to government and corporate clients. Austin has two support and two operating departments- government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Austin's cost records indicate the departments-administrative services (AS) and information systems (IS Ell (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 "" for any zero balances.) Support Departments Operating Departments Requirements Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations Allocation of AS costs Alocation of IS costs 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. Slep-down method (Allocate IS first) 2. Compare and explain differences in the support-department costs allocated Data Table to each operating department. What approaches might be used to decide the sequence in which to alocate support departments when using the step-down method? 3. SUPPORT OPERATING AS IS GOVT CORP Total PrintDone Budgeted overhead costs before any S 630,000 $ 2,400,000 8,825,000 S 12,450,000 S 24,305,000 interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) 20% 52% 28% 100% | Check Answer 10% 27% 63% 100% |Explanation / Answer
Answer 1-a. Support Department Cost Allocation Statement Under Direct Method Support Operating AS IS Govt. Corp. Budgeted Overhead Costs $ 630,000 $ 2,400,000 $ 8,825,000 $ 12,450,000 Allocation of AS (52:28) $ (630,000) $ 409,500 $ 220,500 Allocation of IS (27:63) $ (2,400,000) $ 720,000 $ 1,680,000 Total Allocated Costs $ - $ - $ 9,954,500 $ 14,350,500 Answer 1-b. Support Department Cost Allocation Statement Under Step Down Method (Allocate AS First) Support Operating AS IS Govt. Corp. Budgeted Overhead Costs $ 630,000 $ 2,400,000 $ 8,825,000 $ 12,450,000 Allocation of AS (20:52:28) $ (630,000) $ 126,000 $ 327,600 $ 176,400 Allocation of IS (27:63) $ (2,526,000) $ 757,800 $ 1,768,200 Total Allocated Costs $ - $ - $ 9,910,400 $ 14,394,600 Answer 1-c. Support Department Cost Allocation Statement Under Step Down Method (Allocate AS First) Support Operating AS IS Govt. Corp. Budgeted Overhead Costs $ 630,000 $ 2,400,000 $ 8,825,000 $ 12,450,000 Allocation of IS (10:27:63) $ 240,000 $ (2,400,000) $ 648,000 $ 1,512,000 Allocation of AS (52:28) $ (870,000) $ - $ 565,500 $ 304,500 Total Allocated Costs $ - $ - $ 10,038,500 $ 14,266,500 Answer 2. Operating Govt. Corp. Direct Method $ 9,954,500 $ 14,350,500 Step Down Method (AS First) $ 9,910,400 $ 14,394,600 Step Down Method (IS First) $ 10,038,500 $ 14,266,500 The direct method ignores any services to other support departments. The step-down method partially recognizes services to other support departments. Answer 3. Three criteria that could determine the sequence in the step-down method are: 1. Allocate support departments on a ranking of the percentage of their total services provided to other support departments 2. Allocate support departments on a ranking of the total dollar amount in the support departments 3. Allocate support departments on a ranking of the dollar amounts of service provided to other support departments
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