Data Table:

A	B	C	D	E
1		SUPPORT DEPARTMENTS		OPERATING DEPARTMENTS
2		Human Resources	Information Systems	Corporate Sales	Consumer Sales
3	Budgeted costs incurred before any interdepartment cost allocations	$72,700	$234,400	$998,270	$489,860
4	Support work supplied by human resources department
5	Budgeted number of employees	0	21	42	28
6	Support work supplied by information systems department
7	Budgeted processing time (in minutes)	320	0	1,920	1,600

Requirement 1. Describe the key features of the reciprocal method.

The reciprocal allocation method explicitly includes the mutual services provided

among all support departments

. Interdepartmental relationships

are

fully incorporated into the support department cost allocations.

Requirement 2. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method.

Before we can allocate the support departments' costs to the two operating departments using the reciprocal method, let's first determine the linear equations for each support department. Then off-line solve for HR and IS (Information Systems), so that you may complete the allocation of the support departments' costs. (Abbreviations used: HR = human resources; IS = information system.)

HR=	$72,700	+	0.08333	IS
IS=	$234,400	+	0.23077	HR

Now allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method. (Round proportions to five decimal places, .XXXXX, and your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for zero balances.)

	Support Deparments		Operating Departments
	HR	Info. Systems	Corporate	Consumer	Total
Costs incurred	72700	234400	988270	489860	1795230
Allocation of HR costs
Allocation of Info. Systems costs
Total budgeted costs of operating departments	0	0