Obooks, an online book retailer, has two operating departmentscorporate sales and consumer salesand two support departmentshuman resources and information systems.

Each sales department conducts merchandising and marketing operations independently. Obooks uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The controller of Obooks reads a widely used textbook that states that "the reciprocal method is conceptually the most defensible." He seeks your assistance.

The following data are available for September 2017:

1.	Describe the key features of the reciprocal method.
2.	Allocate the support departments' costs (human resources and informationsystems) 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, orreciprocal) would you recommend? Why?

Support Departments Human Information Resources Systems Operating Departments Corporate Consumer Sales Sales $ 90,000 $ 227,000 $ 993,000 $ 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 48 32 400 | 2,160 1,440 Support Departments Operating Departments HR Info. Systems Corporate Consumer Total Costs incurred $ 90,000 $ 227,000 $ 993,000 $ 481,000 $ 1,791,000 Allocation of HR costs (90,000) 54,000 136,200 36,000 90,800 Allocation of Info. Systems costs (227,000) $ 0 $ 0 $ 1,183,200 $ 607,800 $ 1,791,000 Total budgeted costs of operating departments Support Departments Operating Departments HR Info. Systems Corporate Consumer Total 90,000 $ 227,000 $ 993,000 $ 481,000 $ 1,791,000 (90,000) 18,000 43,200 28,800 Costs incurred $ Allocation of HR costs $ 0 245,000 (245,000) Allocation of Info. Systems costs 147,000 98,000 $ 0 $ 1,183,200 $ 607,800 $ 1,791,000 Total budgeted costs of operating departments *Proportions for services provided to other support departments: human resources (HR), 0.20000; information sytems (IS), 0.10000