3. Allocate the service department costs to the operating departments using the reciprocal method. a. First, set

Question:

3. Allocate the service department costs to the operating departments using the reciprocal method.

a. First, set up the chart, including initial costs and fractions. Stop—Check!

b. Next, determine the amount allocated out of each service department. Stop—Check!

c. Next, allocate costs from the first service department. Stop—Check!

d. Next, allocate costs from subsequent service departments. Stop—Check!

e. Finally, find the total allocation to each operating department. Stop—Check!

Mulberry Corporation has two service departments (Janitorial and Human Resources) and two operating departments (Operating A and Operating B). Mulberry allocates Janitorial costs ($40,000 this period) on the basis of square feet, and Human Resources costs ($60,000 this period) on the basis of number of employees. Each department has the following cost allocation base usage:

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