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Chekov Company has two support departments, Human Resources and General Factory, and to producing departments. Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Support Departments Human General Resources Factory $170,000 $340,000 Direct costs Allocate: 60 1,500 6,000 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Human Resources Producing Departments Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by General Factory Human Resources 0✔ General Factory Fabricating Assembly $114,800 $95.000 45 Human Resources General Factory 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed requirement 1. 80 Human Resources (HR) General Factory (GF) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollars.) Human Resources (HR) General Factory (GF) 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. Support Departments Producing Departments Human Resources General Factory 170,000✔ 340,000 ✓ (GF) (HR) Fabricating Fabricating Assembly 114,800 ✔ Assembly 95,000 ✓ 100

Chekov Company has two support departments, Human Resources and General Factory, and to producing departments. Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Support Departments Human General Resources Factory $170,000 $340,000 Direct costs Allocate: 60 1,500 6,000 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Human Resources Producing Departments Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by General Factory Human Resources 0✔ General Factory Fabricating Assembly $114,800 $95.000 45 Human Resources General Factory 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed requirement 1. 80 Human Resources (HR) General Factory (GF) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollars.) Human Resources (HR) General Factory (GF) 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. Support Departments Producing Departments Human Resources General Factory 170,000✔ 340,000 ✓ (GF) (HR) Fabricating Fabricating Assembly 114,800 ✔ Assembly 95,000 ✓ 100

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 8E
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Reciprocal Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Human Resources Human Resources (HR) General Factory (GF) Number of employees Square footage 6,000 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Direct costs Support Departments Allocate: Human Resources $170,000 Human Resources General Factory Total after allocation 1,500 = $ Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by General Factory Human Resources 0 ✓ General Factory $340,000 170,000 ✓ General Factory 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1. $ ✓ $ 60 + Producing Departments Fabricating Assembly $114,800 $95,000 + 0 Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) General Factory (GF) 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. Support Departments Producing Departments Human Resources General Factory 340,000 ✓ 45 ✓ 0 ✓ (GF) (HR) 80 $ Fabricating Fabricating Assembly 114,800 ✔ S Assembly 95,000
Transcribed Image Text:Reciprocal Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Human Resources Human Resources (HR) General Factory (GF) Number of employees Square footage 6,000 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Direct costs Support Departments Allocate: Human Resources $170,000 Human Resources General Factory Total after allocation 1,500 = $ Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by General Factory Human Resources 0 ✓ General Factory $340,000 170,000 ✓ General Factory 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1. $ ✓ $ 60 + Producing Departments Fabricating Assembly $114,800 $95,000 + 0 Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) General Factory (GF) 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. Support Departments Producing Departments Human Resources General Factory 340,000 ✓ 45 ✓ 0 ✓ (GF) (HR) 80 $ Fabricating Fabricating Assembly 114,800 ✔ S Assembly 95,000
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