Problem 1

Samsung has two operating/user departments, Gen 4 & Gen 5. The two support departments are Information Technology (IT) & Product Development (PD). The costs incurred in each of these departments are as follows:

Gen 4

$300,000

Gen 5

$480,000

IT

$60,000

PD

$150,000

The actual level of support is as follows:

Supplied by

Used by

IT

PD

Gen 4

Gen 5

IT

10%

30%

60%

PD

20%

25%

55%

Determine the cost allocated to:

1. Gen 4 using the direct method
2. Gen 5 using the direct method
3. Gen 4 using the step-down method (allocating IT first)
4. Gen 4 using the step-down method (allocating PD first)
5. Gen 4 using the reciprocal method
6. Gen 5 using the reciprocal method