E$-$books, an online book retailer, has two operating divisions$-$corporate sales and consumer sales$-$and two support divisions$-$human resources and information systems. Each sales division conducts he step$-$down allocation data.

the requirements.

Data

al method.

for each support divisic

nts to the nearest whol Direct Allocation Data

$\backslash$table$[[$Costs incurred,Support Divisions,Operating Divisions,Total$],[,$HR$,$Info. Systems,Corporate,Consumer$],[$$$,66,000$$$,232,000$$$,993,000$$$,$$$,489,000$$$,1,780,000],[$Allocation of HR costs,,$(66,000),,40,543,25,457,],[$Allocation of info. systems costs,,,$(232,000),125,269,106,731,],[$Total budaeted costs of operatina divisions,$$,0=^($$$),0$$$,$$$1,158,812$$$,$$$621,188$$$,1,780,000,]]$ lew the step$-$down allocation data.

Read the requirements.

Step$-$down Allocation Data

$\backslash$table$[[$Costs incurred,Support Divisions,Operating Divisions,Total$],[,$HR$,$Info. Systems,Corporate,Consumer$],[$$$,66,000,232,000,$$$,993,000,489,000$$$,$$$1,780,000],[$Allocation of HR costs,,$(66,000),16,851,30,192,18,957,],[$Support Divisions Subtotal,$$,0,248,851,,,],[$Allocation of info. systems costs,,,$(248,851),134,367,114,484,],[$Total budgeted costs of operating divisions,,,$$,$$$1,157,559$~$=,622,441$$$,$$$1,780,000]]$scribe

Required

tal relationships

Describe the key features of the reciprocal method.

Allocate the support divisions' costs $($human resources and

information systems$)$ to the two operating divisions using the reciprocal

method.

In the case presented in this exercise, which method $($direct$,$ step$-$down,

or reciprocal$)$ would you recommend? Why?

merchandising and marketing operations independently. E$-$books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The controller

of E$-$books reads a widely used textbook that states "the reciprocal method is conceptually the most defensible." He seeks your assistance. The following data are available for September.

View the data. View the direct allocation data.

View the step$-$down allocation data.

Read the requirements.

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 divisions' costs $($human resources and information systems$)$ to the two operating divisions using the reciprocal method.

Before we can allocate the support divisions' costs to the two operating divisions using the reciprocal method, first determine the linear equations for each support division. Then, solve for HR $($human

resources$)$ first and then IS $($information systems$),$ so that you may complete the allocation of the support divisions' costs. $($Round the dollar amounts to the nearest whole dollar. Enter the proportions to

five decimal places.$)$

$HR=$

$IS=+$