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HANAP/USAP/DEAL Company has two supporting departments: Human Resources and Accounting; and
Commercia Sales, Assembly and __ are the three producing departmen of the entit. The costs and
activities are as follows: Direct Cost. Dollar of Asset Employed. Number of
Employees. Human Resources. $80,000. 1,600,900.7Accounting. $50,000. 1,043,000.
13Commercial Sales. $40,000. 2,562,000 15Assembly. $20,000. 981,000. 6__.
$10,000. 645,100 9Human Resouces are allocated on he basis of number of employees; while
Accounting services are allocated based on dollar of asset employed. Under the reciprocal allocation
method for the support departments, determine the total cost of Commercial Sales. Solution: Dollar of
Asset Employed. %. Number of Employees %Human Resorce 1,600,900 N/A7 0.14Accounting 1,043,000
0.15.13 N/ACommercial Sales 2,562,000 0.38 15 0.30__ 981,000 0.14 6 0.12__ 645,100 0.09 9
0.186,832,000 100% 50 100%Equation:A= $80,000 + 0.14BB= $50,000 + 0.15Awhere: A=Human
Resouces; B=Accounting A= $80,000 + 0.14 ($50,000+0.15A) =
ASDFGHQWERTY Company has two supporting departments: Human Resources and Accounting; and
Commercia Sales, Assembly and __ are the three producing departmen of the entit. The costs and
activities are as follows:
Human Resouces are allocated on he basis of number of employees; while Accounting services are
allocated based on dollar of asset employed. Under the reciprocal allocation method for the support
departments, determine the total cost of Commercial Sales.
Solution:
Dollar of Asset Employed. %. Number of Employees %
Human Resorce 1,600,900 N/A7 0.14
Accounting 1,043,000 0.15.13 N/A
Commercial Sales 2,562,000 0.38 15 0.30
__ 981,000 0.14 6 0.12
__ 645,100 0.09 9 0.18
6,832,000 100% 50 100%
Equation:
A= $80,000 + 0.14B
B= $50,000 + 0.15A
where: A=Human Resouces; B=Accounting
A= $80,000 + 0.14 ($50,000+0.15A)
=