Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Total Transactions 0 10% 60% $ 370,000 IT Costs Operations Using Department Operations 0 0 0 $ 790,000 Allocated to: Transactions $ 1,630,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. 0 30% 0 $ Retail Retail 0 $ $ 3,830,000 Commercial 70% 30% 10% 0 Commercial 30% 30% 30% $ 2,380,000

Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Total Transactions 0 10% 60% $ 370,000 IT Costs Operations Using Department Operations 0 0 0 $ 790,000 Allocated to: Transactions $ 1,630,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. 0 30% 0 $ Retail Retail 0 $ $ 3,830,000 Commercial 70% 30% 10% 0 Commercial 30% 30% 30% $ 2,380,000

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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