O$-$books, an online book retailer, has two operating departments$\_$corporate sales and consumer sales$-$and two support

departments$-$human resources and information systems.

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The following data are available for September $2020$:

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$($Click the icon to view the direct allocation data.$)$

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

The reciprocal allocation method explicitly includes the mutual services provided

Interdepartmental relationships

fully incorporated into the support department cost allocations

Direct allocation data

Data table

Step$-$down allocation data

Requirements

$-$

$*$Proportions for services provided to other support departments: human resources $($HR$),0\mathrm{.}20000$; information sytems $($IS$),$

$0\mathrm{.}10000$

Describe the key features of the reciprocal method.

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.

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

or reciprocal$)$ would you recommend? Why?