Hessel Corporation has two operating departments (Domestic and Global) and three servicedepartments: Human Resources (HR), Legal, and Testing. In the most recent period, the following costsand service department usage ratios were recorded:Supplying Department Using DepartmentHuman ResourcesLegalHuman Resources 010%10%$ 264,500LegalTestingDirect costCostsHuman resourcesLegalTestingTotalTestingGlobal15%00Domestic10%00Global25%30%45%50%Required:Allocate the service department costs to the two operating departments using the reciprocal method.Note: Do not round intermediate calculations.FromAllocated to:Domestic60%45%$ 190,000 $90,000 $538,000 $ 487,000

Reciprocal method of Service Department Cost AllocationThe reciprocal approach is a cost-allocation…

Hessel Corporation has two operating departments (Domestic and Global) and three service departments: Human Resources (HR), Legal, and Testing. In the most recent period, the following costs and service department usage ratios were recorded: Supplying Department Using Department Human Resources Legal Human Resources 0 Legal Testing Direct cost 10% 10% $ 264,500 Human resources Legal Testing Total Testing 15% 0 0 Domestic 10% 0 0 Global 25% 30% 45% 50% 60% 45% $ 190,000 $90,000 $ 538,000 $ 487,000 Required: Allocate the service department costs to the two operating departments using the reciprocal method. Note: Do not round intermediate calculations. From Allocated to: Costs Domestic Global

Hessel Corporation has two operating departments (Domestic and Global) and three service departments: Human Resources (HR), Legal, and Testing. In the most recent period, the following costs and service department usage ratios were recorded: Supplying Department Using Department Human Resources Legal Human Resources 0 Legal Testing Direct cost 10% 10% $ 264,500 Human resources Legal Testing Total Testing 15% 0 0 Domestic 10% 0 0 Global 25% 30% 45% 50% 60% 45% $ 190,000 $90,000 $ 538,000 $ 487,000 Required: Allocate the service department costs to the two operating departments using the reciprocal method. Note: Do not round intermediate calculations. From Allocated to: Costs Domestic Global

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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