Illawarra Consultant (IC) has two support departments: Information Technology (IT) and Administration (Admin). In addition, IC...

 

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Illawarra Consultant (IC) has two support departments: Information Technology (IT) and Administration (Admin). In addition, IC also has two operation departments that deal with two distinct clients, namely, Individual and Corporate department. For the next quarter, the budget of all departments is available below: Support Department Operation Department IT Admin 1,500,000 2,500,000 Budgeted costs $ Individual Corporate Total 7,500,000 8,000,000 19,500,000 40% 35% 100% Support work supplied by IT 25% Support work supplied by Admin 30% 30% 40% 100% Required (show your calculation): (a) Allocate the support departments' costs to operation departments using the direct method. (b) Allocate the support departments' costs to operation departments using the step-down method. Use the highest rank of services provided to another support department to be allocated first. (c) Allocate the support departments' costs to operation departments using the reciprocal method. (5 marks) (5 marks) (10 marks) Illawarra Consultant (IC) has two support departments: Information Technology (IT) and Administration (Admin). In addition, IC also has two operation departments that deal with two distinct clients, namely, Individual and Corporate department. For the next quarter, the budget of all departments is available below: Support Department Operation Department IT Admin 1,500,000 2,500,000 Budgeted costs $ Individual Corporate Total 7,500,000 8,000,000 19,500,000 40% 35% 100% Support work supplied by IT 25% Support work supplied by Admin 30% 30% 40% 100% Required (show your calculation): (a) Allocate the support departments' costs to operation departments using the direct method. (b) Allocate the support departments' costs to operation departments using the step-down method. Use the highest rank of services provided to another support department to be allocated first. (c) Allocate the support departments' costs to operation departments using the reciprocal method. (5 marks) (5 marks) (10 marks)

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