Reciprocal Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Support Departments Human Resources $170,000 General Factory $340,000 1,500 Producing Departments 60 Number of employees Square footage 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Fabricating Assembly $114,800 $95,000 45 80 6,000
Reciprocal Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Support Departments Human Resources $170,000 General Factory $340,000 1,500 Producing Departments 60 Number of employees Square footage 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Fabricating Assembly $114,800 $95,000 45 80 6,000
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 8E
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