Support department cost allocation—reciprocal services methodDavis 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: MaintenanceDepartmentSecurityDepartmentCuttingDepartmentSewingDepartmentMachine hours800 2,000 7,600 10,400 Asset value$2,000 $1,380 $1,500 $6,500 Department cost$43,200 $19,200 $62,000 $84,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. CuttingDepartment SewingDepartment Production departmentsʼ total costs$ $

Calculate the maintenance department cost and security department cost.

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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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	$1,380	$1,500	$6,500
Department cost	$43,200	$19,200	$62,000	$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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