GB Service Corporation has two service departments, Administration and Accountin
ID: 2498308 • Letter: G
Question
GB Service Corporation has two service departments, Administration and Accounting, and two operating departments, East and West. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of GB operations follows:(c) Allocate the cost of the service departments to the operating departments using the reciprocal method.
Administration Accounting East West
Employees – 23 16 61
Transactions 50,000 – 9,000 36,000
Department direct costs $50,000 $19,000 $140,000 $520,000
Explanation / Answer
GB Service Corporation has two service departments, Administration and Accountin
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