Problem 11-60 (Static) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Infor Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were rec Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Total Transactions 0 10% 60% $ 240,000 IT Costs Operations 0 0 0 $ 660,000 Using Department Operations Allocated to: Transactions Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. S 0 20% 0 $ 1,500,000 Retail Retail 0 $ $ 3,700,000 Commercial 70% 30% 10% 0 Commercial 30% 40% 30% $ 2,250,000
Problem 11-60 (Static) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Infor Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were rec Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Total Transactions 0 10% 60% $ 240,000 IT Costs Operations 0 0 0 $ 660,000 Using Department Operations Allocated to: Transactions Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. S 0 20% 0 $ 1,500,000 Retail Retail 0 $ $ 3,700,000 Commercial 70% 30% 10% 0 Commercial 30% 40% 30% $ 2,250,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Problem 11-60 (Static) 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
Total
Transactions
0
10%
60%
$ 240,000
IT
Costs Operations
0
0
0
$ 660,000
Using Department
Operations
Allocated to:
Transactions
Required:
a. Allocate the service department costs to the two operating departments using the reciprocal method.
$
0
20%
0
$ 1,500,000
Retail
Retail
0 $
70%
30%
10%
$ 3,700,000
Commercial
Commercial
30%
40%
30%
$ 2,250,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe5213aea-34f8-4732-8870-716467e80992%2Fd7689b12-dc4f-4aa9-acd8-8908a0f6c7b2%2Ft329sa_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 11-60 (Static) 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
Total
Transactions
0
10%
60%
$ 240,000
IT
Costs Operations
0
0
0
$ 660,000
Using Department
Operations
Allocated to:
Transactions
Required:
a. Allocate the service department costs to the two operating departments using the reciprocal method.
$
0
20%
0
$ 1,500,000
Retail
Retail
0 $
70%
30%
10%
$ 3,700,000
Commercial
Commercial
30%
40%
30%
$ 2,250,000
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