Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Using Department Transactions IT Operations Retail Commercial Transactions 000 70% 30% IT 10 % 0 40% 30% 20% Operations 60% 0 0 10% 30% Direct cost $ 440,000 $860,000 $ 1,700,000 $3,900,000 $2,450,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method.
Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Using Department Transactions IT Operations Retail Commercial Transactions 000 70% 30% IT 10 % 0 40% 30% 20% Operations 60% 0 0 10% 30% Direct cost $ 440,000 $860,000 $ 1,700,000 $3,900,000 $2,450,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...
Question
![Dunedin Bank has two operating departments (Retail
and Commercial) and three service departments:
Operations, Information Technology (IT), and
Transactions. For the last period, the following costs and
service department usage ratios were recorded:
Supplying Department Using Department Transactions
IT Operations Retail Commercial Transactions
000 70% 30% IT 10 % 0 40% 30% 20% Operations
60% 0 0 10% 30% Direct cost $ 440,000 $860,000 $
1,700,000 $3,900,000 $2,450,000 Required: a.
Allocate the service department costs to the two
operating departments using the reciprocal method.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffbedf64b-8824-4b63-9fa3-4e7694bcf2e0%2F5ceb2753-486c-4e5d-81b0-511d9e97d038%2F5wwkz6h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Dunedin Bank has two operating departments (Retail
and Commercial) and three service departments:
Operations, Information Technology (IT), and
Transactions. For the last period, the following costs and
service department usage ratios were recorded:
Supplying Department Using Department Transactions
IT Operations Retail Commercial Transactions
000 70% 30% IT 10 % 0 40% 30% 20% Operations
60% 0 0 10% 30% Direct cost $ 440,000 $860,000 $
1,700,000 $3,900,000 $2,450,000 Required: a.
Allocate the service department costs to the two
operating departments using the reciprocal method.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Cornerstones of Cost Management (Cornerstones Ser…](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![Cornerstones of Cost Management (Cornerstones Ser…](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning