Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Transactions Total 8 18% 70% $ 310,000 IT Costs Operations S 250,000 $ 750,000 670,000 x 1,510,000 x Using Department Operations 8 8 8 $ $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. x Answer is complete but not entirely correct. Allocated to: Transactions 250,000 XS 2,233,333 x $ 8 30% 8 $ 1,570,000 $ 3,770,000 Retail 0X X $ Retail OX 0x 0 Commercial S 70% 30% 18% 833,333 X 0x 0 x 833,333 Commercial 30% 38% 28 $ 2,320,000
Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Transactions Total 8 18% 70% $ 310,000 IT Costs Operations S 250,000 $ 750,000 670,000 x 1,510,000 x Using Department Operations 8 8 8 $ $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. x Answer is complete but not entirely correct. Allocated to: Transactions 250,000 XS 2,233,333 x $ 8 30% 8 $ 1,570,000 $ 3,770,000 Retail 0X X $ Retail OX 0x 0 Commercial S 70% 30% 18% 833,333 X 0x 0 x 833,333 Commercial 30% 38% 28 $ 2,320,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1)
Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information
Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded:
Supplying
Department
Transactions
IT
Operations
Direct cost
IT
From:
Operations
Transactions
Transactions
Total
8
18%
70%
$ 310,000
IT
Costs
Operations
S 250,000 $ 750,000
670,000 x
1,510,000 x
Using Department
Operations
8
8
8
$
$ 730,000
Required:
a. Allocate the service department costs to the two operating departments using the reciprocal method.
x Answer is complete but not entirely correct.
Allocated to:
Transactions
250,000 XS
2,233,333 x
$
8
30%
8
$ 1,570,000 $ 3,770,000
Retail
0X
X $
Retail
OX
0x
0
Commercial
S
70%
30%
18%
833,333 X
0x
0 x
833,333
Commercial
30%
38%
28
$ 2,320,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb3c3484f-05b4-417e-96dc-e0a3873c7d92%2F9ef3cf40-59be-437b-b5a5-e515cef12bb5%2Fo8fozj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1)
Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information
Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded:
Supplying
Department
Transactions
IT
Operations
Direct cost
IT
From:
Operations
Transactions
Transactions
Total
8
18%
70%
$ 310,000
IT
Costs
Operations
S 250,000 $ 750,000
670,000 x
1,510,000 x
Using Department
Operations
8
8
8
$
$ 730,000
Required:
a. Allocate the service department costs to the two operating departments using the reciprocal method.
x Answer is complete but not entirely correct.
Allocated to:
Transactions
250,000 XS
2,233,333 x
$
8
30%
8
$ 1,570,000 $ 3,770,000
Retail
0X
X $
Retail
OX
0x
0
Commercial
S
70%
30%
18%
833,333 X
0x
0 x
833,333
Commercial
30%
38%
28
$ 2,320,000
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