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Ch. 7 (Part 2) Homework Assignmer eBook > Print Item Reciprocal Method of Support Department Cost Allocation Valron Company has two support departments, Human
Ch. 7 (Part 2) Homework Assignmer eBook > Print Item Reciprocal Method of Support Department Cost Allocation Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Support Departments Producing Departments Human General Resources Factory Fabricating $150,000 $360,000 Assembly $114,200 $95,000 60 80 170 1,000 5,700 13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Valron Company uses the reciprocal method to allocate support department costs. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Proportion of Driver Used by Human Resources General Factory Human Resources 0 0.19 X General Factory 0.05 0 Fabricating Assembly 0.25 X 0.54 X 0.28 X 0.66 X 2. Develop a simultaneous equations system of total costs for the support departments. If required, round your answers to four decimal places. Use these numbers for subsequent calculations. If required, round all other intermediate calculations to six decimal places, except the answers computed in requirement 1.
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