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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
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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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 ex 10% 10% ex Service department costs Repairs allocation HR allocation IT allocation Total costs allocated IT ex 20% $ M1 40% 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 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.) Repairs $ 20,000 $ M2 60% 35% 70% 23,960 $ HR 39,000 $ (39,600) 0 $ IT 45,000 $ 45,000 $ M1 0 $ 0 $ M2 0 0
Transcribed Image Text: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 ex 10% 10% ex Service department costs Repairs allocation HR allocation IT allocation Total costs allocated IT ex 20% $ M1 40% 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 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.) Repairs $ 20,000 $ M2 60% 35% 70% 23,960 $ HR 39,000 $ (39,600) 0 $ IT 45,000 $ 45,000 $ M1 0 $ 0 $ M2 0 0
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