Problem 15-20 1B. Can the calculation for alocation 2 be explained? (b). Expert SolutionTo determineThe allocation of costs of two support departments to the two operating departments by the recipromethod using repeated iterations.Explanation of SolutionAllocation of the costs by the reciprocal method using repeated iterations is,SupportParticularsAsISOperating$600,000 $2,400,000Govt.CorpBudgeted overhead costs1st allocation:Allocation of AS costs (25%:40 %:35%) ($600,000) $150,000 $240,000 $210,000Allocation of IS costs (10%:30 %:60%) $255,000 ($2,550,000) $765,000$1,530,0002nd allocation:Allocation of AS costs (25%:40%:35%) ($255,000) $63,750 $102,000 $9,250Allocation of IS costs (10%:30 %:60%) $6,375 $63,750 $19,125 $38,250 indicate the followBudgeted overhead costs before anyinterdepartment cost allocationsSupport work supplied by AS(budgeted head count)Support work supplied by IS(budgeted computer time)SUPPORTASIS$ 600,000 $2,400,00010%25%OPERATINGGOVT40%CORP$ 8,756,000 $ 12,452,000 $ 24,208,00030%35%Total60%100%100%

Answered: Problem 15-20 1B. Can the calculation…

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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Problem 15-20 1B. Can the calculation for alocation 2 be explained?

indicate the follow
Budgeted overhead costs before any
interdepartment cost allocations
Support work supplied by AS
(budgeted head count)
Support work supplied by IS
(budgeted computer time)
SUPPORT
AS
IS
$ 600,000 $2,400,000
10%
25%
OPERATING
GOVT
40%
CORP
$ 8,756,000 $ 12,452,000 $ 24,208,000
30%
35%
Total
60%
100%
100%

Expert Solution

Step 1

So reciprocal methods are methods that are used to allocate service department cost to the other department and these include repetitions methods because these are located to the support department as well as the main department.

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