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: Maintenance Department Security Department Cutting Department Sewing Department Machine hours 800 2,000 7,600 10,400 Asset value $2,000 $1,400 $3,000 $5,000 Department cost $42,480 $18,880 $61,000 $84,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Sewing Department Production departmentsʼ total costs $ $
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: Maintenance Department Security Department Cutting Department Sewing Department Machine hours 800 2,000 7,600 10,400 Asset value $2,000 $1,400 $3,000 $5,000 Department cost $42,480 $18,880 $61,000 $84,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Sewing Department Production departmentsʼ total costs $ $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:
| Maintenance Department |
Security Department |
Cutting Department |
Sewing Department |
|
| Machine hours | 800 | 2,000 | 7,600 | 10,400 |
| Asset value | $2,000 | $1,400 | $3,000 | $5,000 |
| Department cost | $42,480 | $18,880 | $61,000 | $84,000 |
Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method.
| Cutting Department |
Sewing Department |
||
| Production departmentsʼ total costs | $ | $ |
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