Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, InformationTechnology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded:SupplyingDepartmentTransactionsITOperationsDirect costFrom:TransactionsITOperationsTransactionsTotal010%50%$ 340,000ITUsing DepartmentOperationsCosts Operations$ 760,000 $ 228,000 $1,828,0001,536,000000$760,000Allocated to:Transactions30%0$ 1,600,000RetailRequired:a. Allocate the service department costs to the two operating departments using the reciprocal method.70%30%10%$ 3,800,000CommercialRetail76,000 $ 228,000 $ 228,000914,000182,800731,2001,075,200460,800$ 1,486,000 $ 1,420,000Commercial30%30%40%$ 2,350,000

It means allocating the service department cost to operating departmentIt can be done through…

Answered: a. Allocate the service department…

Business

Accounting

a. Allocate the service department costs to the two operating departments using the reciprocal method.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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