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Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.)

Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT HR IT tickets Employees 0 16 1,500 0 Publishing 2,400 24 Binding 2,100 40 Department direct costs $ 150,000 $ 247,500 $ 430,000 $ 390,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Answer is not complete. Cost Allocation To: From: IT HR Publishing Binding Service department costs $ 150,000 $ 247,500 $ 0 $ 0 IT 2,400 x 2,100 HR 1,500 x Total $ 150,000 $ 247,500 $ 3,900 $ 2,100
Transcribed Image Text:Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT HR IT tickets Employees 0 16 1,500 0 Publishing 2,400 24 Binding 2,100 40 Department direct costs $ 150,000 $ 247,500 $ 430,000 $ 390,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Answer is not complete. Cost Allocation To: From: IT HR Publishing Binding Service department costs $ 150,000 $ 247,500 $ 0 $ 0 IT 2,400 x 2,100 HR 1,500 x Total $ 150,000 $ 247,500 $ 3,900 $ 2,100
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