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Problem 11-54 Cost Allocation: Step and Reciprocal Methods (LO 11-3, 4) Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three
Problem 11-54 Cost Allocation: Step and Reciprocal Methods (LO 11-3, 4) Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded Processing Administration 40% Using Department Maintenance Supplying Department Processing Administration Maintenance Direct cost Branches 15% 60% 20% $5,000,000 Electronic 45% 40% 50% $2,000,000 15% $90,000 15% $600,000 $320,000 Required: Allocate the service department costs to the two operating departments using the reciprocal method Costs 320,000 Electronic Allocated to: Administration Branches $ 320,000 Processing $ 48,000 $ Maintenance Processing Administration Total $ 0 $
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