Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $241,000. The total cost of the Cafeteria Department is $403,000. The number of employees and the square footage in each department are as follows: Employees Square FeetSecurity Department10 530 Cafeteria Department24 2,400 Laser Department40 4,800 Forming Department50 800 Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments. Support Department Cost Allocation-Reciprocal Services MethodBlue Africa Inc. produces laptops and desktop computers. The company's production activities mainly occur in what the company calls its Laser and Forming departments. TheCafeteria and Security departments support the company's production activities and allocate costs based on the number of employees and square feet, respectively. The total cost ofthe Security Department is $241,000. The total cost of the Cafeteria Department is $403,000. The number of employees and the square footage in each department are as follows:Square FeetEmployees10244050Security DepartmentCafeteria DepartmentLaser DepartmentForming DepartmentUsing the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the CafeteriaDepartment and to each of the production departments.Security Department cost allocation5302,4004,800800CafeteriaDepartmentLaserDepartmentFormingDepartment

Formula for reciprocal services method : True overhead of service department = Overhead of that…

Answered: Support Department Cost…

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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Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $241,000. The total cost of the Cafeteria Department is $403,000. The number of employees and the square footage in each department are as follows:

	Employees	Square Feet
Security Department	10	530
Cafeteria Department	24	2,400
Laser Department	40	4,800
Forming Department	50	800

Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments.

Support Department Cost Allocation-Reciprocal Services Method
Blue Africa Inc. produces laptops and desktop computers. The company's production activities mainly occur in what the company calls its Laser and Forming departments. The
Cafeteria and Security departments support the company's production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of
the Security Department is $241,000. The total cost of the Cafeteria Department is $403,000. The number of employees and the square footage in each department are as follows:
Square Feet
Employees
10
24
40
50
Security Department
Cafeteria Department
Laser Department
Forming Department
Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria
Department and to each of the production departments.
Security Department cost allocation
530
2,400
4,800
800
Cafeteria
Department
Laser
Department
Forming
Department

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