Solution-Allocate the service costs using the reciprocal

Allocate the service costs using the reciprocal method

Reference no: EM13513738

Angelo Trucking is divided into two operating divisions: Perishable Foods and Household Goods. The company allocates personnel and accounting costs to each operating division.

Personnel costs are allocated on the basis of employees. Accounting costs are allocated on the basis of the number of transactions processed. Allocations for the coming year are based on the following data:

	Service Departments	Operating Divisions
		Perishable	Household
	Personnel	Accounting	Foods	Goods
Overhead costs	$100,000	$205,000	$80,000	$50,000
Number of employees	20	60	60	80
Transactions processed	2,000	200	3,000	5,000

(a) Allocate the service costs using the direct method.

(6) Allocate the service costs using the step method.

Reference no: EM13513738

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Allocate the service costs using the reciprocal method

Reference no: EM13513738

Reference no: EM13513738

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