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QUESTION 2 (15 marks) Temple and Webster, an online home furniture retailer, has two operating departments (corporate sales and consumer sales) and two support departments
QUESTION 2 (15 marks) Temple and Webster, an online home furniture retailer, has two operating departments (corporate sales and consumer sales) and two support departments (human resources and information systems). Each sales department conducts merchandising and marketing operations independently. Temple and Webster uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The following data are available for April 2021: SUPPORT DEPARTMENT Human Information Resources Systems OPERATING DEPARTMENTS Corporate Consumer Sales Sales $72,700 $234,400 $998,270 $489,860 Budgeted costs incurred before any inter-department 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) 21 42 28 320 1,920 1,600 REQUIRED: 1. Define the main features of the reciprocal method. (2 marks) 2. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method. (13 marks)
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