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Problem - Nokia Inc. has two user departments, Wireless Communications & Digital Communications. The two support departments are Technical Support (TS) & Research & Development (R&D). The costs incurred in each of these departments are as follows:
Wireless Communications
$110,000
Digital Communications
$60,000
TS
$80,000
R&D
$90,000
The actual level of support is as follows:
Supplied by
Used by
Wireless
Digital
20%
50%
30%
25%
45%
Determine the cost allocated to:
1. Wireless Communications using the direct method
2. Digital Communications using the direct method
3. Wireless Communications using the step-down method (allocating TS first)
4. Wireless Communications using the step-down method (allocating R&D first)
5. Wireless Communications using the reciprocal method
6. Digital Communications using the reciprocal method
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