Support department cost allocation-reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Maintenance Department 800 $2,000 $36,000 Feedback Production departments' total costs Security Department 2,000 $1,670 $16,000 Cutting Department Cutting Department 63,436 X Department cost Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. 7,200 $2,500 $64,000 Sewing Department $ 96,299.2 X Sewing Department 10,800 $5,500 $82,000 Check My Work The reciprocal services method considers all inter-support-department service, and thus is the most accurate of the three support department allocation methods. The proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated must be determined. Then, the support department costs are allocated simultaneously among the departments.
Support department cost allocation-reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Maintenance Department 800 $2,000 $36,000 Feedback Production departments' total costs Security Department 2,000 $1,670 $16,000 Cutting Department Cutting Department 63,436 X Department cost Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. 7,200 $2,500 $64,000 Sewing Department $ 96,299.2 X Sewing Department 10,800 $5,500 $82,000 Check My Work The reciprocal services method considers all inter-support-department service, and thus is the most accurate of the three support department allocation methods. The proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated must be determined. Then, the support department costs are allocated simultaneously among the departments.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Support department cost allocation-reciprocal services method
Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the
production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are
allocated based on asset value. Information about each department is provided in the following table:
Machine hours
Asset value
Maintenance
Department
800
$2,000
$36,000
Feedback
Security
Department
2,000
$1,670
$16,000
Cutting
Department
Production departments' total costs $ 63,436 X
Cutting
Department
7,200
$2,500
$64,000
Department cost
Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal
services method.
Sewing
Department
$ 96,299.2 X
Sewing
Department
10,800
$5,500
$82,000
Check My Work
The reciprocal services method considers all inter-support-department service, and thus is the most accurate of the three support department
allocation methods. The proportional usage of each support department's cost driver by the other departments to which its costs are to be
allocated must be determined. Then, the support department costs are allocated simultaneously among the departments.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education