Tuscaloosa National Bank has two service departments, the Human Resources (HR) D
ID: 2587050 • Letter: T
Question
Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments’ output for the year is as follows:
Provider of Service
Computing
The budgeted costs in the two service departments for the year are as follows:
Required:
Use the reciprocal-services method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. (Round intermediate calculations and final answers to the nearest dollar amount.)
Loan
Provider of Service
User of Service HRComputing
HR -- 15% Computing 10% -- Deposit 60% 50% Loan 30% 35%Explanation / Answer
In the reciprocal method, the relationship between the service departments is recognized. This means service
department costs are allocated to and from the other service departments.
Putting the value of (2) in 1
Putting the value of HR in (2)
In the reciprocal method, the relationship between the service departments is recognized. This means service
department costs are allocated to and from the other service departments.
HR= 153000 + .15 COMPUTING ….(1) Computing = 229500 + .10 HR …..(2)Putting the value of (2) in 1
HR = 153000 + .15 ( 229500 + .10HR) HR = 153000 + 34425 + .015HR HR-.015HR = 187425 HR = 187485/.985 HR = 190279Putting the value of HR in (2)
Computing = 229500 + .1X190279 Computing = 229500 + 19028 Computing = 248528 Provider of service Deposit Loan Allocation of HR department cost 114167 57084 Allocation of Computing department cost 124264 86985 Total cost allocated to each department 238431 144069Related Questions
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