Question
I have figured out part A and B of this quesiton. For the reciprocal method, how do I figure out the percentage in the equation?
I have figured out part A and B of this quesiton. For the reciprocal method, how do I figure out the percentage in the equation?
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows:
Administration Accounting Domestic International
Employees - 27 51 22
Transactions 38,000 - 25,000 100,000
Department direct costs $ 359,000 $ 142,000 $ 950,000 $3,650,000
Allocate the cost of the service departments to the operating departments using the reciprocal method.(Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)
Total service department costs = Direct costs of the service department + Cost Allocated to the Service Department
S1 (Administration) = $ 359,000 + ? S2
S2 (Accounting) = 142,000 + ? S1
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