Support-department cost allocations; direct, step-down, and reciprocal methods. Ballantine Corporation has two operating departments: Eastern Department and Western Department. Each of the operating departments uses the services of the company's two support departments: Engineering and Information Technology. Additionally, the Engineering and Information Technology departments use the services of each other. Budgeted data are as follows:

Budgeted Overhead before allocations:

Support Dept:

Engineering : 300,000

Info Tech: 250,000

Operating Dept:

Eastern: 650,000

Western: 920,000

TOTAL: 2,120,000

Support work furnished

By Engineering:

Budgeted Engineering salaries

Support Dept:

Info Tech: $60,000 Percentage 30%

Operating Dept:

Eastern: $50,000 Percentage 25%

Western: $90,000 Percentage 45%

TOTAL: $200,000 Percentage 100%

By Info Tech

Budgeted IT Service Hours

Support Dept

Engineering: 450hrs Percentage 15%

Operating Dept

Eastern: 1,500hrs Percentage 50%

Western: 1,050hrs Percentage 35%

TOTAL: 3,000hrs Percentage 100%

Required:

1.Using an Excel spreadsheet, complete a support department allocation to determine the total overhead costs of the operating departments (Eastern and Western) after the support-department costs of Engineering and Information Technology have been allocated using (a) the direct method, (b) the step-down method (allocate Engineering first), and (c) the reciprocal method?

2.Which method would you recommend that Ballantine Corporation use to allocate service-department costs? Why?

The test will ask questions that require you to "pull" certain pieces of information from your completed Excel spreadsheet.

ACTUAL ANSWERS NEEDED:

Enter theTotal Budgeted Overhead of the Eastern and Western Operating Departments AFTER support department costs have been allocated using the (1) direct, (2) step-down, and (3) reciprocal methods.Enter numbers only, and round to the nearest dollar.For example, if you want to enter $100,000.42, enter "100,000"(with or without comma)butdo NOT enter the "$" and do not enter the 42cents.

Using the DIRECT method:

Eastern =

Western =

Using the Step-Down method:

Eastern =

Western =

Using the Reciprocal method:

Eastern =

Western =