Describe the key features of the reciprocal method. 2. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method. Use (a) linear equations and (b) repeated iterations. 3. In the case presented in this exercise, which method (direct, step-down, or reciprocal) would you recommend? Why? Direct allocation data Support Departments Operating Departments HR Info. Systems Corporate Consumer Total Costs incurred $90,000 $227,000 $994,000 $484,000 $1,795,000 Allocation of HR costs (90,000) 49,500 40,500 Allocation of Info. Systems costs (227,000) 158,900 68,100 Total budgeted costs of operating departments $0 $0 $1,202,400 $592,600 $1,795,000 A B C D E 1 SUPPORT DEPARTMENTS OPERATING DEPARTMENTS 2 Human Resources Information Systems Corporate Sales Consumer Sales 3 Budgeted costs incurred before any interdepartment cost allocations $90,000 $227,000 $994,000 $484,000 4 Support work supplied by human resources department 5 Budgeted number of employees 0 20 44 36 6 Support work supplied by information systems department 7 Budgeted processing time (in minutes) 400 0 2,5
Describe the key features of the reciprocal method. 2. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method. Use (a) linear equations and (b) repeated iterations. 3. In the case presented in this exercise, which method (direct, step-down, or reciprocal) would you recommend? Why? Direct allocation data Support Departments Operating Departments HR Info. Systems Corporate Consumer Total Costs incurred $90,000 $227,000 $994,000 $484,000 $1,795,000 Allocation of HR costs (90,000) 49,500 40,500 Allocation of Info. Systems costs (227,000) 158,900 68,100 Total budgeted costs of operating departments $0 $0 $1,202,400 $592,600 $1,795,000 A B C D E 1 SUPPORT DEPARTMENTS OPERATING DEPARTMENTS 2 Human Resources Information Systems Corporate Sales Consumer Sales 3 Budgeted costs incurred before any interdepartment cost allocations $90,000 $227,000 $994,000 $484,000 4 Support work supplied by human resources department 5 Budgeted number of employees 0 20 44 36 6 Support work supplied by information systems department 7 Budgeted processing time (in minutes) 400 0 2,5
Chapter9: Responsibility Accounting And Decentralization
Section: Chapter Questions
Problem 3EB: The following information is from Dessert Dynasty. The company runs three stores and the December...
Related questions
Question
1.
|
Describe the key features of the reciprocal method.
|
2.
|
Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method. Use (a) linear equations and (b) repeated iterations.
|
3.
|
In the case presented in this exercise, which method (direct, step-down, or reciprocal) would you recommend? Why?
|
Direct allocation data
|
Support Departments
|
Operating Departments
|
|
||
|
HR
|
Info. Systems
|
Corporate
|
Consumer
|
Total
|
Costs incurred
|
$90,000
|
$227,000
|
$994,000
|
$484,000
|
$1,795,000
|
Allocation of HR costs
|
(90,000)
|
|
49,500
|
40,500
|
|
Allocation of Info. Systems costs
|
|
(227,000)
|
158,900
|
68,100
|
|
Total budgeted costs of operating departments
|
$0
|
$0
|
$1,202,400
|
$592,600
|
$1,795,000
|
|
A
|
B
|
C
|
D
|
E
|
1
|
|
SUPPORT DEPARTMENTS
|
OPERATING DEPARTMENTS
|
||
---|---|---|---|---|---|
2
|
|
Human Resources
|
Information Systems
|
Corporate Sales
|
Consumer Sales
|
3
|
Budgeted costs incurred before any interdepartment cost allocations
|
$90,000
|
$227,000
|
$994,000
|
$484,000
|
4
|
Support work supplied by human resources department
|
|
|
|
|
5
|
Budgeted number of employees
|
0
|
20
|
44
|
36
|
6
|
Support work supplied by information systems department
|
|
|
|
|
7
|
Budgeted processing time (in minutes)
|
400
|
0
|
2,520
|
1,080
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning