Question
In: Accounting
Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments...
Great Eastern Credit Union (GECU) has two operating departments
(Branches and Electronic) and three service departments
(Processing, Administration, and Maintenance). During July, the
following costs and service department usage ratios were
recorded:
| Supplying Department | Using Department | ||||||||||||||
| Processing | Administration | Maintenance | Branches | Electronic | |||||||||||
| Processing | 0 | 60 | % | 0 | 20 | % | 20 | % | |||||||
| Administration | 0 | 0 | 0 | 60 | % | 40 | % | ||||||||
| Maintenance | 15 | % | 15 | % | 0 | 20 | % | 50 | % | ||||||
| Direct cost | $ | 93,000 | $ | 630,000 | $ | 350,000 | $ | 5,300,000 | $ | 2,150,000 | |||||
Required:
Allocate the service department costs to the two operating departments using the reciprocal method.
Solutions
Expert Solution
Requirement :
| Allocated to: | |||||
| Costs | Processing | Administration | Branches | Electronic | |
| Maintenance (15:15:20:50) | $ 350,000 | $ 52,500 | $ 52,500 | $ 70,000 | $ 175,000 |
| Processing (60:20:20) | $ 145,500 | $ 87,300 | $ 29,100 | $ 29,100 | |
| Administration (60:40) | $ 769,800 | $ 461,880 | $ 307,920 | ||
| $ 560,980 | $ 512,020 | ||||
Working:
| Total processing department costs: | |
| Direct cost | $ 93,000 |
| Share of cost in maintenance [350000*15%] | $ 52,500 |
| $ 145,500 |
| Total Administrative department costs: | |
| Direct cost | $ 630,000 |
| Share of Processing [145500*60%] | $ 87,300 |
| Share of Maintenance cost [350000*15%] | $ 52,500 |
| $ 769,800 |
ekkarill92 answered 5 months agoRelated Solutions
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