Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR IT Accounting 0% HR West East 20% 40% 40% 0% 10% 0% 10% 40% 60% 60% 20% The direct costs of the service departments in the previous period were $86,750 for IT, $99,000 for Accounting, and $112,500 for HR. Required: Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Allocation IT Accounting HR West East Service department costs $ 86,750 $ 99,000 $ 112,500 $ 0 $ 0 IT allocation Accounting allocation HR allocation Total costs allocated $ 86,750 $ 99,000 $ 112,500 $ 0 $ 0

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production
departments (West and East). The usage data for each of the service departments for the previous period follow:
IT
Accounting
HR
IT
Accounting
0%
HR
West East
20%
40%
40%
0%
10%
0%
40%
60%
10%
60% 20%
The direct costs of the service departments in the previous period were $86,750 for IT, $99,000 for Accounting, and
$112,500 for HR.
Required:
Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not
required.)
Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations.
Allocation
IT
Accounting
HR
West
East
Service department costs
$
86,750 $
99,000 $
112,500 $
0 $
0
IT allocation
Accounting allocation
HR allocation
Total costs allocated
$
86,750 $
99,000 $
112,500 $
0 $
0
Transcribed Image Text:Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR IT Accounting 0% HR West East 20% 40% 40% 0% 10% 0% 40% 60% 10% 60% 20% The direct costs of the service departments in the previous period were $86,750 for IT, $99,000 for Accounting, and $112,500 for HR. Required: Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Allocation IT Accounting HR West East Service department costs $ 86,750 $ 99,000 $ 112,500 $ 0 $ 0 IT allocation Accounting allocation HR allocation Total costs allocated $ 86,750 $ 99,000 $ 112,500 $ 0 $ 0
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