Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following usage data for each of the service departments for the previous period follow. RepairHRITM1M2Repairs-0%0%`40%60%HR10%-20%35%35%IT0%10%-20%70% The direct costs of the service departments in the previous period were $20,000 for Repairs, $39,600 for HR, and $45,000 for IT.Required :- Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required.)

Answered: Bens Corporation has three service…

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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Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following usage data for each of the service departments for the previous period follow.

	Repair	HR	IT	M1	M2
Repairs	-	0%	0%`	40%	60%
HR	10%	-	20%	35%	35%
IT	0%	10%	-	20%	70%

The direct costs of the service departments in the previous period were $20,000 for Repairs, $39,600 for HR, and $45,000 for IT.

Required :- Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required.)

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