Reciprocal Method of Support Department Cost Allocation
Valron Company has two support departments, Human Resources and
General Factory, and two producing departments, Fabricating and
Assembly.
Support Departments
Producing
Departments
Human
Resources
General
Factory
Fabricating
Assembly
Direct costs
$140,000
$330,000
$114,200
$95,000
Normal activity:
Number of employees
—
60
80
170
Square footage
1,000
—
5,700
13,300
The costs of the Human Resources Department are allocated on the
basis of number of employees, and the costs of General Factory are
allocated...