Support department cost allocation-reciprocal services methodBecker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departmentsare as follows:Support DepartmentJanitorial DepartmentCafeteria DepartmentCost DriverSquare footage to be servicedNumber of employeesJanitorialDepartment$310,000Janitorial Department cost allocationCafeteria Department cost allocationCafeteriaDepartment$169,0005,0003AssemblyDepartmentDepartment costs$680,000Square feet4,00010Number of employeesAllocate the support department costs to the production departments using the reciprocal services method.5010CuttingDepartment$1,504,0001,00030CuttingDepartmentAssemblyDepartment

The method of allocation of costs of two service departments is by way of reciprocal services method…

Answered: Allocate the support department costs…

Business

Accounting

Allocate the support department costs to the production departments using the reciprocal services method.

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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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Support department cost allocation-reciprocal services method
Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments
are as follows:
Support Department
Janitorial Department
Cafeteria Department
Cost Driver
Square footage to be serviced
Number of employees
Janitorial
Department
$310,000
Janitorial Department cost allocation
Cafeteria Department cost allocation
Cafeteria
Department
$169,000
5,000
3
Assembly
Department
Department costs
$680,000
Square feet
4,000
10
Number of employees
Allocate the support department costs to the production departments using the reciprocal services method.
50
10
Cutting
Department
$1,504,000
1,000
30
Cutting
Department
Assembly
Department

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