Sh.28. Exercise 11-37 (Static) Cost Allocation: Reciprocal Method (LO 11-4)Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The followingusage data for each of the service departments for the previous period followRepairsHRITRepairs HRex10%10%exService department costsRepairs allocationHR allocationIT allocationTotal costs allocatedITex20%$M140%35%20%The direct costs of the service departments in the previous period were $20,000 for Repairs, $39,600 for HR, and $45,000 for ITRequired:Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required.)(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)Repairs$ 20,000 $M260%35%70%23,960 $HR39,000 $(39,600)0 $IT45,000 $45,000 $M10 $0 $M200

The various methods for cost allocation are direct, step method, reciprocal method. Using reciprocal…

Exercise 11-37 (Static) Cost Allocation: Reciprocal Method (LO 11-4) Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following usage data for each of the service departments for the previous period follow Repairs HR IT Repairs HR et 10% 10% ex IT ex 20% MI 40% 35% 20% M2 60% 35% 70% The direct costs of the service departments in the previous period were $20,000 for Repairs, $39,600 for HR, and $45,000 for IT Required: Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)

Exercise 11-37 (Static) Cost Allocation: Reciprocal Method (LO 11-4) Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following usage data for each of the service departments for the previous period follow Repairs HR IT Repairs HR et 10% 10% ex IT ex 20% MI 40% 35% 20% M2 60% 35% 70% The direct costs of the service departments in the previous period were $20,000 for Repairs, $39,600 for HR, and $45,000 for IT Required: Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)

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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