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Problem 15-20 1B. Can the calculation for alocation 2 be explained

Problem 15-20 1B. Can the calculation for alocation 2 be explained

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 15-20 1B. Can the calculation for alocation 2 be explained? 

(b). Expert Solution To determine The allocation of costs of two support departments to the two operating departments by the recipro method using repeated iterations. Explanation of Solution Allocation of the costs by the reciprocal method using repeated iterations is, Support Particulars As IS Operating $600,000 $2,400,000 Govt. Corp Budgeted overhead costs 1st allocation: Allocation of AS costs (25%:40 %:35%) ($600,000) $150,000 $240,000 $210,000 Allocation of IS costs (10%:30 %:60%) $255,000 ($2,550,000) $765,000 $1,530,000 2nd allocation: Allocation of AS costs (25%:40%:35%) ($255,000) $63,750 $102,000 $9,250 Allocation of IS costs (10%:30 %:60%) $6,375 $63,750 $19,125 $38,250
Transcribed Image Text:(b). Expert Solution To determine The allocation of costs of two support departments to the two operating departments by the recipro method using repeated iterations. Explanation of Solution Allocation of the costs by the reciprocal method using repeated iterations is, Support Particulars As IS Operating $600,000 $2,400,000 Govt. Corp Budgeted overhead costs 1st allocation: Allocation of AS costs (25%:40 %:35%) ($600,000) $150,000 $240,000 $210,000 Allocation of IS costs (10%:30 %:60%) $255,000 ($2,550,000) $765,000 $1,530,000 2nd allocation: Allocation of AS costs (25%:40%:35%) ($255,000) $63,750 $102,000 $9,250 Allocation of IS costs (10%:30 %:60%) $6,375 $63,750 $19,125 $38,250
indicate the follow Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) SUPPORT AS IS $ 600,000 $2,400,000 10% 25% OPERATING GOVT 40% CORP $ 8,756,000 $ 12,452,000 $ 24,208,000 30% 35% Total 60% 100% 100%
Transcribed Image Text:indicate the follow Budgeted overhead costs before any interdepartment cost allocations Support work supplied by AS (budgeted head count) Support work supplied by IS (budgeted computer time) SUPPORT AS IS $ 600,000 $2,400,000 10% 25% OPERATING GOVT 40% CORP $ 8,756,000 $ 12,452,000 $ 24,208,000 30% 35% Total 60% 100% 100%
Expert Solution
Step 1

So reciprocal methods are methods that are used to allocate service department cost to the other department and these include repetitions methods because these are located to the  support department as well as the main department.

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