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Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following
Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Using Department Transactions IT Operations Retail Commercial Transactions 0 0 0 70% 30% IT 10% 0 20% 30% 40% Operations 60% 0 0 10% 30% Direct cost $ 240,000 $ 660,000 $ 1,500,000 $ 3,700,000 $ 2,250,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method
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