Refer to the data given in Exercise 14-20.

In Exercise 14-20

Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support divisions-administrative services (AS) and information systems (IS) and two operating divisions-government consulting (Govt.) and corporate consulting (Corp.). For the first quarter of 2015, Phoenix's cost records indicate the following:

Required
1. Allocate the two support divisions' costs to the two operating divisions using the reciprocal method.
2. Compare and explain differences in requirement 1 with those in requirement 1 of Exercise 14-20. Which method do you prefer? Why?

Transcribed Image Text:

Support Operating ия. AS IS Corp. Total Budgeted overhead costs before any Support work supplied by AS Support work supplied by IS interdepartment cost allocations (budgeted head count) (budgeted computer time) S600,000 $2,400,000 S8,756,000 $12,452,000 $24,208,000 100% 100% 25% 40% 35% 10% 30% 60%