Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1)Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, InformationTechnology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded:SupplyingDepartmentTransactionsITOperationsDirect costITFrom:OperationsTransactionsTransactionsTotal810%70%$ 310,000ITUsing DepartmentOperationsCostsOperationsS 250,000 $ 750,000670,000 X1,510,000 x888$ 730,000Required:a. Allocate the service department costs to the two operating departments using the reciprocal method.Answer is complete but not entirely correct.Allocated to:Transactions$ 250,000 $2,233,333 x830%8$ 1,570,000$RetailRetail0X $0.x0x0CommercialS$ 3,770,00078%30%10%833,333 X0x0x833,333Commercial36%38%28%$ 2, 320, 000

Cost allocation:Cost allocation refers to the costing technique through which costs can be allocated…

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 8 10% 70% $ 310,000 IT Using Department Operations Costs Operations S 250.000 $ 750,000 670,000 x 1.510,000 x 8 8 8 $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. Answer is complete but not entirely correct. Allocated to: Transactions 0 30% 8 $ 250,000 $ 2,233,333 x $ 1,570,000 $ 3,770,000 Retail Retail Commercial 833,333 X x 0X S 0x 0x 0 S 70% 30% 10% 833,333 Commercial 30% 38% 28% $ 2,320,000

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 8 10% 70% $ 310,000 IT Using Department Operations Costs Operations S 250.000 $ 750,000 670,000 x 1.510,000 x 8 8 8 $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. Answer is complete but not entirely correct. Allocated to: Transactions 0 30% 8 $ 250,000 $ 2,233,333 x $ 1,570,000 $ 3,770,000 Retail Retail Commercial 833,333 X x 0X S 0x 0x 0 S 70% 30% 10% 833,333 Commercial 30% 38% 28% $ 2,320,000

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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