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Allocate the support department costs to the operating units using the reciprocal method.

Allocate the support department costs to the operating units using the reciprocal method.

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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Jennifer Hansen is the manager of American Autos. American Autos provides three types of services, Sales, Repairs, and Rebuilds. Jennifer needs to provide a profit analysis to the CEO at the end of the current fiscal year so the pricing and marketing strategies can be adjusted as needed. She has gathered the following information for the company. Cost # of employees Maint Hours HR Hours Revenue Marketing $217,000 Sales $999,000 5 50 100 Support Departments Maintenance $328,000 Repairs $1,309,000 7 300 25 HR $49,000 Rebuilds $2,101,000 2 25 180 Sales $356,000 12 800 1,200 Operating Units Repairs $860,000 16 1,900 850 Rebuilds $1,102,000 6 2,600 800
Transcribed Image Text:Jennifer Hansen is the manager of American Autos. American Autos provides three types of services, Sales, Repairs, and Rebuilds. Jennifer needs to provide a profit analysis to the CEO at the end of the current fiscal year so the pricing and marketing strategies can be adjusted as needed. She has gathered the following information for the company. Cost # of employees Maint Hours HR Hours Revenue Marketing $217,000 Sales $999,000 5 50 100 Support Departments Maintenance $328,000 Repairs $1,309,000 7 300 25 HR $49,000 Rebuilds $2,101,000 2 25 180 Sales $356,000 12 800 1,200 Operating Units Repairs $860,000 16 1,900 850 Rebuilds $1,102,000 6 2,600 800
Allocate the support department costs to the operating units using the reciprocal method. (Do not round the intermediate calculations. Round answers to 0 decimal places, e.g. 5,275.) Sales Repairs Rebuilds Save for later LA $ 69
Transcribed Image Text:Allocate the support department costs to the operating units using the reciprocal method. (Do not round the intermediate calculations. Round answers to 0 decimal places, e.g. 5,275.) Sales Repairs Rebuilds Save for later LA $ 69
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