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Shiva, owner of Automated fabric, Inc., is interested in using the reciprocal allocation method to allocate service department costs to operating (i.e. production) departments. Automated
Shiva, owner of Automated fabric, Inc., is interested in using the reciprocal allocation method to allocate service department costs to operating (i.e. production) departments. Automated Fabric has two operating departments: Weaving and Colorizing. Automated Fabric has two service departments: Maintenance and Personnel. The following data is available: Maintenance Dept. $200,000 Personnel Dept. $300,000 Budgeted costs The quantity of service provided by maintenance dept to other departments is mesured by the budgeted maintenance hours. The quantity of service provided by personnel deparment is measured by the number of employess in the deparment receiving service. The following data has been provided to you. Maintenance Personnel Weaving Budgeted maintenance hours for the user dept. Colorizing 4,800 800 4,000 # of employees in the user department 12 24 36 a) Write down the linear equations for calculating the modified costs for the service departments for the purpose of reciprocal method of allocation. Calculate the modified costs for the maintenance and personnel departments after solving the system of equations in (a) c) Find the costs allocated from Maintenance and Personnel to Weaving and Colorizing departments
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