Blue River Inc. produces horse and rancher equipment. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $283,000. The total cost of the Cafeteria Department is $185,000. The number of employees and the square footage in each department are as follows: Department Employees Square Feet Security 15 585 Cafeteria 27 2,500 Laser 38 4,200 Forming 42 1,550 Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments.
Blue River Inc. produces horse and rancher equipment. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $283,000. The total cost of the Cafeteria Department is $185,000. The number of employees and the square footage in each department are as follows:
Department Employees Square Feet
Security 15 585
Cafeteria 27 2,500
Laser 38 4,200
Forming 42 1,550
Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments.
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