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resources and I-books, an online book retailer, has two operating departments-corporate sales and consumer sales-and two support departments human resources and information systems. Each sales
resources and I-books, an online book 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. I- books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The controller of I-books 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 2013: e defensble e sekon systems costs. EB (Click the icon to view the data.) (Click the icon to view the direct allocation data.) (Click the icon to view the step-down allocation data.) Requirements 1. Describe the key features of the reciprocal method 2. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method 3. In the case presented in this exercise, which method (direct, step-down, or reciprocal) would you recommend? Why? Requirement 1. Describe the key features of the reciprocal method. The reciprocal allocation method explicitly includes the mutual services provided fully incorporated into the support department cost allocations. ! liierdepartmentai relationships .Interdepartmental relationships
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