Question Content Area
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.
| Support Departments | Producing Departments | |||
| Human Resources |
General Factory |
Fabricating | Assembly | |
| Direct costs | $160,000 | $330,000 | $114,800 | $95,000 |
| Normal activity: | ||||
| Number of employees | — | 60 | 45 | 80 |
| Square footage | 1,500 | — | 6,000 | 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.
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 | General Factory | Fabricating | Assembly | |
| Human Resources | fill in the blank 1 | fill in the blank 2 | fill in the blank 3 | fill in the blank 4 |
| General Factory | fill in the blank 5 | fill in the blank 6 | fill in the blank 7 | fill in the blank 8 |
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) | = | $fill in the blank 9 | + | fill in the blank 10 (GF) |
| General Factory (GF) | = | $fill in the blank 11 | + | fill in the blank 12 (HR) |
Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.)
| Human Resources (HR) | $fill in the blank 13 |
| General Factory (GF) | $fill in the blank 14 |
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 | Producing Departments | ||||
| Human Resources | General Factory | Fabricating | Assembly | ||
| Direct costs | $fill in the blank 15 | $fill in the blank 16 | $fill in the blank 17 | $fill in the blank 18 | |
| Allocate: | |||||
| Human Resources | fill in the blank 19 | fill in the blank 20 | fill in the blank 21 | fill in the blank 22 | |
| General Factory | fill in the blank 23 | fill in the blank 24 | fill in the blank 25 | fill in the blank 26 | |
| Total after allocation | $fill in the blank 27 | $fill in the blank 28 | $fill in the blank 29 | $fill in the blank 30 | |