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O-books, an online book retailer, has two operating departments-corporate sales and consumer sales-and two support departments-human resources and information systems. (Click the icon to
O-books, an online book retailer, has two operating departments-corporate sales and consumer sales-and two support departments-human resources and information systems. (Click the icon to view additional information.) 1 The following data are available for September 2020: A B D E SUPPORT DEPARTMENTS OPERATING DEPARTMENTS Human Information Resources Systems Corporate Consumer Sales Sales $ 90,000 $ 227,000 $ 992,000 $ 484,000 Each sales department conducts merchandising and marketing operations independently. O-books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The controller of O-books reads a widely used textbook that states that "the reciprocal method is conceptually the most defensible." He seeks your assistance. 2 Budgeted costs incurred before any 3 interdepartment cost allocations Support work supplied by human 4 resources department 5 Budgeted number of employees Support work supplied by information 6 systems department 7 Budgeted processing time (in minutes) Costs incurred 0 20 48 32 400 2,160 1,440 Support Departments Operating Departments HR Info. Systems Corporate Consumer Total $ 90,000 $ 227,000 $ 992,000 $ 484,000 $ 1,793,000 (90,000) Allocation of HR costs Allocation of Info. Systems costs (227,000) 54,000 136,200 36,000 90,800 $ 0 $ 0 $ 1,182,200 $ 610,800 $ 1,793,000 Total budgeted costs of operating departments Costs Incurred Allocation of HR costs $ Support Departments Operating Departments HR Info. Systems Corporate Consumer 90,000 $ 227,000 $ 992,000 $ 484,000 $1,793,000 (90,000) 18,000 Total 43,200 28,800 0 245,000 (245,000) 147,000 98,000 Allocation of Info. Systems costs $ 0 $ 1,182,200 $ 610,800 $ 1,793,000 Total budgeted costs of operating departments "Proportions for services provided to other support departments: human resources (HR), 0.20000; information sytems (IS), 0.10000.
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