Support department cost allocation—reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table:   MaintenanceDepartment SecurityDepartment CuttingDepartment SewingDepartment Machine hours 800         2,000      7,200       10,800      Asset value $2,000         $1,670           $2,500      $5,500      Department cost $36,000         $16,000      $64,000      $82,000      Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method.   CuttingDepartment   SewingDepartment Production departmentsʼ total costs $fill in the blank 1   $fill in the blank 2   Feedback Area

Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
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Problem 1RQ
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Support department cost allocation—reciprocal services method

Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table:

  Maintenance
Department
Security
Department
Cutting
Department
Sewing
Department
Machine hours 800         2,000      7,200       10,800     
Asset value $2,000         $1,670           $2,500      $5,500     
Department cost $36,000         $16,000      $64,000      $82,000     

Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method.

  Cutting
Department
  Sewing
Department
Production departmentsʼ total costs $fill in the blank 1   $fill in the blank 2
 

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