E-books, an online book retailer, has two operating departmentscorporate sales and consumer sales and two support departments-human resources and information systems. (Click the icon to view additional information.) The following data are available for September 2017: Click the icon to view the data.) (Click the icon to view the direct allocation data.) ) (Click the icon to view the step-down allocation data.) Read the requirements Direct allocation data 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 suppor Costs incurred HR= 0.10000 S $90,000 + IS Support Departments Operating Departments HR Info. Systems Corporate Consumer Total 90.000 S 227,000 $ 992,000 $ 481,000 $ 1,790,000 (90.000) 49,500 40,500 (227.000) 158,900 68.100 OS O $ 1,200,400 S 589,600 $ 1,790,000 Allocation of HR costs Allocation of Info. Systems costs IS 5227.000 + 0.20000 HR s Total budgeted costs of operating departments 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 de Support Deparments Operating Departments HR Info. Systems Corporate Consumer Total Data Table Costs incurred Print Done Allocation of HR costs Allocation of Info. Systems costs Total budgeted costs of operating departments Support Departments Human Information Resources Systems Operating Departments Corporate Consumer Sales Sales 0 Step-down allocation data $ 90,000 $ 227.000 S 992,000 $ 481,000 Budgeted costs incurred before any interdepartment cost allocations Support work supplied by human resources department Budgeted number of employees Support work supplied by information systems department Budgeted processing time (in minutes) 20 44 38 400 2.520 1,080 Support Departments Operating Departments HR Info. Systems Corporate Consumer Total Costs incurred $ 90,000 $ 227,000 $ 992,000 $ 481,000 $ 1,790,000 Allocation of HR costs (90,000) 18,000 39,600 32,400 $ 0 0 245.000 (245,000) 171,500 Allocation of Info. Systems costs 73,500 $ 0 $ 1,203,100 $ Total budgeted costs of operating departments 588,900 $ 1,790,000 *Proportions for services provided to other support departments: human resources (HR), 0.20000: information sytems (IS). 0.10000 0 Requirements 1. Describe the key features of the reciprocal method 2. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method. Use (a) linear equations and (b) repeated iterations. 3. In the case presented in this exercise, which method (direct, step-down, or reciprocal) would you recommend? Why? Print Done Print Done Enter any number in the edit fields and then click Check
