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.)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 5CE: Refer to Cornerstone Exercise 7.3. Now assume that Valron Company uses the reciprocal method to...
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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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F71a6b9af-79cd-4d12-a858-098c897cdcbb%2F0ec31fdf-c502-401d-9eff-d9d49a5e59fe%2Fapp7ujf_processed.jpeg&w=3840&q=75)
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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