Allocate the service costs using the reciprocal method

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Reference no: EM13513738

Angelo Trucking is divided into two operating divisions: Perishable Foods and Household Goods. The company allocates personnel and accounting costs to each operating division.

Personnel costs are allocated on the basis of employees. Accounting costs are allocated on the basis of the number of transactions processed. Allocations for the coming year are based on the following data:


Service Departments

Operating Divisions



Perishable

Household


Personnel

Accounting

Foods

Goods

Overhead costs

$100,000

$205,000

$80,000

$50,000

Number of employees

20

60

60

80

Transactions processed

2,000

200

3,000

5,000

(a) Allocate the service costs using the direct method.

(6) Allocate the service costs using the step method.

(c) Allocate the service costs using the reciprocal method.

Reference no: EM13513738

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