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 Human Resources (HR) Number of employees Square footage 1,500 6,000 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. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by General Factory (GF) Direct costs Allocate: Support Departments Human General Resources Factory $360,000 $150,000 Assembly 0.4324 ✔ Human Resources General Factory 0.6512 ✔ 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement: Human Resources General Factory Total after allocation Human Resources ✔ 0.0698 ✔ 150,000✔ 60 Producing Departments -197,505 X 27,505 x Fabricating Assembly $120.900 $66.000 394,051 X General Factory 0.3243 ✔ OV 360,000✔ Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar) Human Resources (HR) 4,491,003 X General Factory (GF) 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. Support Departments Producing Departments Human Resources General Factory Fabricating 150,000✔ (HR) 0.3243 ✔ 0.0698✔ (GP) 360,000 ✔ 45 00 64,051 X 80 -394,051 X Fabricating 0.2432 ✔ 0.2791 ✔ 120,900✔ 48,033 X 109,980 x 272,013 X Assembly 86,000 85,401 X 256,606 X 436,007

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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:
Required:
Human Resources
Number of employees
Square footage
1,500
6,000
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.
Support Departments
Human
Resources
$150,000
Direct costs
Allocate:
Human Resources
General Factory
Human Resources
Total after allocation
General
Factory
1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations.
Proportion of Driver Used by
$360,000
150,000✔
60
-197,505 X
27,505 X
0✔
Producing Departments
Fabricating Assembly
$120,900
$86,000
Human Resources
0.3243 ✔
0.4324 ✓
General Factory
0.0698 ✔
0V
0.6512 ✔
2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1.
General Factory
45
0.3243 ✔
General Factory (GF)-
360,000 ✓
(HR)
Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.)
Human Resources (HR)
4,491,003 X
394,051 X
General Factory (GF)
3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding.
Support Departments
Producing Departments
Human Resources
150,000 ✓
General Factory
360,000 ✓
0.0698✔ (GF)
80
Fabricating
0.2432 ✔
0.2791 ✔
64,051 X
-394,051 X
Fabricating
Assembly
120,900✔
48,033 X
109,980 X
272,813 X
Assembly
86,000 ✓
85,401 X
256,606 X
436,007 X
Transcribed Image Text: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: Required: Human Resources Number of employees Square footage 1,500 6,000 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. Support Departments Human Resources $150,000 Direct costs Allocate: Human Resources General Factory Human Resources Total after allocation General Factory 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by $360,000 150,000✔ 60 -197,505 X 27,505 X 0✔ Producing Departments Fabricating Assembly $120,900 $86,000 Human Resources 0.3243 ✔ 0.4324 ✓ General Factory 0.0698 ✔ 0V 0.6512 ✔ 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1. General Factory 45 0.3243 ✔ General Factory (GF)- 360,000 ✓ (HR) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) 4,491,003 X 394,051 X General Factory (GF) 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. Support Departments Producing Departments Human Resources 150,000 ✓ General Factory 360,000 ✓ 0.0698✔ (GF) 80 Fabricating 0.2432 ✔ 0.2791 ✔ 64,051 X -394,051 X Fabricating Assembly 120,900✔ 48,033 X 109,980 X 272,813 X Assembly 86,000 ✓ 85,401 X 256,606 X 436,007 X
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