Score: 17.5 of 30 pts 4 of 5(5 complete) Y C Instructor-created question Hw Scor

Question

Score: 17.5 of 30 pts 4 of 5(5 complete) Y C Instructor-created question Hw Score: 59 88%. 101 8 of 1 70 pts Question Help Best Books, an online book retailer, has two operating departments-corporate sales and consumes operations independently. Best Books uses number of employees to conceplualy the most defensible alocate human resources costs and processing sales and two support departments human resources and r information systems. Each sales department conducts merchandsing and marketing He seeks your assistance The following data are available for Seplember 2012 me to allocate information systems costs The controlor of Best Boks reads a welely used bestbook mat atestat controller of e epocal mehr. (Click the icon to view the data ) (Cick the icon to view the direct allocation data) (Cick th, icon to view the step-down allocation data ) Requirements 1. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method Requirement 1. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the recprocal method Before we can allocate the support departments' costs to the two operating departments using the reciprocal method, efs first detemsine the inear equations for each support department Then ofl ine solve for HRt and 15 (nformaton Systemsi, so that you may camplete he alocation of the support departments' costs eod ound percentages to three decrma aces x x%, and your m he nearestwhol dir ow allocate he support departments costs h man resources and ndormation system s to the o ope ating dep tr ents u ng the e ipr cal an ers parentheses or a minus sign when decreasing departments by allocating costs Complete all answer boxes.) Support Deparments Oper -partments Info. Systems Corporate Consumer HR Total Costs incurred Allocation of HR costs Allocation of into Systems costs Choose from any list or enter any number in the input fields and then dick Check Answer Check Answer Clear A All parts showing 1-54 AM

Explanation / Answer

Allocation of Cost of support department using Reciprocal Method.

Step 1 - Main Features of reciprocal method

This method includes the mutual services provided among all support departments.

Interdepartmental relationship are fully incorporated into support department cost allocarion.

Step 2 - Formation of equation

0.07013 of Information system cost

[310/(310+2210+1900)]

0.25 of Human resource cost

[23/(23+40+29)]

Equation is as follows:-

Step 3 - Solving the equation

Putting the equation '2' in equation '1', We get

HR = $74000 + 0.07013 ($231000 + 0.25 HR)

HR = $74000 + $16200 + 0.0175325 HR

HR = $90200 + 0.0175325 HR

HR = $90200/0.9824675

HR = $91810

IS = $231000 + 0.25*91810

IS = $253953

Step 5 Allocation table

$22953

($91810*23/92)

$39917

($91810*40/92)

$28940

($91810*29/92)

Particulars Allocation Human Resources cost (HR cost)

0.07013 of Information system cost

[310/(310+2210+1900)]

Information system cost (IS cost)

0.25 of Human resource cost

[23/(23+40+29)]

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