Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Support Departments Human Resources $150,000 1,500 General Factory $330,000 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. Human Resources ✓ Producing Departments 60 Fabricating Assembly $114,800 $95,000 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 + + 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 oth intermediate calculations to six decimal places, except the answers computed in requirement 1. X 0 ✓ 80 (GF) (HR) Fabricating Human Resources (HR) = $ General Factory (GF) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) Assembly
Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Support Departments Human Resources $150,000 1,500 General Factory $330,000 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. Human Resources ✓ Producing Departments 60 Fabricating Assembly $114,800 $95,000 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 + + 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 oth intermediate calculations to six decimal places, except the answers computed in requirement 1. X 0 ✓ 80 (GF) (HR) Fabricating Human Resources (HR) = $ General Factory (GF) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) Assembly
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
10 .
Transcribed Image Text: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
Direct costs
Allocate:
Human Resources
General Factory
Total after allocation
Human Resources
General Factory
Producing Departments
Fabricating
Assembly
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
Support Departments
Human
Resources
$150,000
Number of employees
Square footage
6,000
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.
1,500
Human Resources
=
General
Factory
=
$330,000
0 ✓
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
Producing Departments
60
Fabricating Assembly
$114,800
$95,000
+
+
General Factory
45
X
0 ✓
80
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.
14,000
Human Resources (HR)
General Factory (GF)
Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.)
Human Resources (HR)
General Factory (GF)
(GF)
(HR)
Fabricating
Assembly
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