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Digital communications using the reciprocal method

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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
 

TS

R&D

Wireless

Digital

TS

  

20%

50%

30%

R&D

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

Reference no: EM131791815

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