Direct, sequential, and reciprocal allocation (Appendix) Boston Box Company has two service departments, maintenance and grounds, and
Question:
Direct, sequential, and reciprocal allocation (Appendix) Boston Box Company has two service departments, maintenance and grounds, and two production departments, fabricating and assembly. Management has decided to allocate maintenance costs on the basis of machine hours used by the departments and grounds costs on the basis of square feet occupied by the departments. The fol¬ lowing data appear in the company's records for 1999:
REQUIRED
(a) Allocate service department costs to the production departments using the direct method.
(b) Allocate service department costs to the production departments using the sequential method, assuming that the costs of the service department incur¬ ring the greatest cost are allocated first.
(c) Allocate service department costs to the production departments using the reciprocal method.
Step by Step Answer:
Management Accounting
ISBN: 9780130101952
3rd Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, S. Mark Young, Rajiv D. Banker, Pajiv D. Banker