Morrell Financial Services (MFS) has three service departments: Accounting, Information Technology (IT), and Personnel. MFS also hastwo operating departments (Advice and Brokerage). Data on service department usage and service direct costs follow:AccountingITPersonnelDirect costUsing DepartmentAccountingITPersonnelAdvice0%16%6%23%31%Brokerage40%0%10%29%45%11%13%0%39%37%$ 197,000$ 281,000$ 264,500NANA**Not applicable for this problem.Required:Assume that Morrell Financial Services uses the reciprocal method of service department cost allocation. What is the total servicedepartment cost allocated to Advice? To Brokerage? (Hint: Use the reciprocal method spreadsheet shown in Exhibit 11.22 as a start toyour analysis.)Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollars.AdviceBrokerageCost Allocated

Reciprocal Method of Cost Allocation:The reciprocal method of cost allocation is a technique used in…

Answered: Assume that Morrell Financial Services…

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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Assume that Morrell Financial Services uses the reciprocal method of service department cost allocation. What is the total service department cost allocated to Advice? To Brokerage? (Hint: Use the reciprocal method spreadsheet shown in Exhibit 11.22 as a start to your analysis.)