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Reciprocal Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Support Departments Human Resources $170,000 General Factory $340,000 1,500 Producing Departments 60 Number of employees Square footage 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Fabricating Assembly $114,800 $95,000 45 80 6,000

Reciprocal Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Support Departments Human Resources $170,000 General Factory $340,000 1,500 Producing Departments 60 Number of employees Square footage 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Fabricating Assembly $114,800 $95,000 45 80 6,000

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 1PB: Support department cost allocation Hooligan Adventure Supply produces and sells various outdoor...
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Reciprocal Method of Support Department Cost Allocation.

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Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by Human Resources Direct costs Allocate: Human Resources General Factory 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1. Human Resources Human Resources (HR) General Factory (GF) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) General Factory (GF) General Factory Total after allocation. General Factory = 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. Support Departments Human Resources Fabricating (GF) (HR) General Factory Assembly Producing Departments Fabricating Assembly
Transcribed Image Text:Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by Human Resources Direct costs Allocate: Human Resources General Factory 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1. Human Resources Human Resources (HR) General Factory (GF) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) General Factory (GF) General Factory Total after allocation. General Factory = 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. Support Departments Human Resources Fabricating (GF) (HR) General Factory Assembly Producing Departments Fabricating Assembly
Reciprocal Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Human Resources Support Departments Human Resources $170,000 Number of employees Square footage 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. 1,500 Human Resources General Factory $340,000 = $ = Producing Departments 60 Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by Fabricating General Factory Fabricating Assembly $114,800 $95,000 + + 45 6,000 General Factory 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1. Human Resources (HR) General Factory (GF) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) General Factory (GF) 80 (GF) (HR) Assembly
Transcribed Image Text:Reciprocal Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Human Resources Support Departments Human Resources $170,000 Number of employees Square footage 14,000 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the reciprocal method to allocate support department costs. 1,500 Human Resources General Factory $340,000 = $ = Producing Departments 60 Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by Fabricating General Factory Fabricating Assembly $114,800 $95,000 + + 45 6,000 General Factory 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1. Human Resources (HR) General Factory (GF) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) General Factory (GF) 80 (GF) (HR) Assembly
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Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by Fabricating Human Resources (HR) General Factory (GF) Human Resources 95,000 X General Factory 95,000 X 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1. $ Direct costs Allocate: Human Resources Human Resources General Factory Total after allocation = $ 170,000 X 170,000 X 150,000 X Human Resources ox 340,000 ✓ (HR) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) 198,240 X 403,436 X General Factory (GF) 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. 0 X General Factory Support Departments 0 X 0 + ✓ + 340,000 X 340,000 X 0.07 X (GF) 0.32 X General Factory 0 X 0 X 0 X 114,800 X 114,800 X 0 ✓ $ Assembly Producing Departments Fabricating 114,800 ✓ 96,825 X 55,507 X 267,132 X Assembly 95,000 ✓ 173,477 X 128,856 X 397,333 X
Transcribed Image Text:Now assume that Chekov Company uses the reciprocal method to allocate support department costs. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by Fabricating Human Resources (HR) General Factory (GF) Human Resources 95,000 X General Factory 95,000 X 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1. $ Direct costs Allocate: Human Resources Human Resources General Factory Total after allocation = $ 170,000 X 170,000 X 150,000 X Human Resources ox 340,000 ✓ (HR) Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) Human Resources (HR) 198,240 X 403,436 X General Factory (GF) 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. Round all allocated costs to the nearest dollar. If an amount is zero, enter "0". Note: There may be a "$1" difference due to intermediate rounding. 0 X General Factory Support Departments 0 X 0 + ✓ + 340,000 X 340,000 X 0.07 X (GF) 0.32 X General Factory 0 X 0 X 0 X 114,800 X 114,800 X 0 ✓ $ Assembly Producing Departments Fabricating 114,800 ✓ 96,825 X 55,507 X 267,132 X Assembly 95,000 ✓ 173,477 X 128,856 X 397,333 X
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