Aurora National Bank has two service departments, the Human Resources (HR) Depar
ID: 2467746 • Letter: A
Question
Aurora National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments' output for the year is as follows: The budgeted costs in the two service departments for the year are as follows: Use the reciprocal-services method to allocate the budgeted costs of the Human Resources and Computing Departments to the Deposit and Loan Departments. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)Explanation / Answer
ORIGINAL COSTS OF SERVICE DEPARTMENTS:
HUMAN RESOURCES = $529000
COMPUTING = $758500
AFTER GETTING THE SHARE FROM DISTRIBUTION OF SERVICE DEPARTMENTS:
HUMAN RESOURCES = $529000 + 10% OF COMPUTING .....................(1)
COMPUTING = $758500 + 10% OF HUMAN RESOURCES .....................(2)
BY PUTTING THE VALUE OF COMPUTING IN EQUATION (1)
HUMAN RESOURCES = $529000 + 10%($758500 + 10% OF HUMAN RESOURCES)
HUMAN RESOURCES = $529000 + $75850 + 0.01 HUMAN RESOURCES
HUMAN RESOURCES – 0.01 HUMAN RESOURCES = $604850
0.99 HUMAN RESOURCES = $604850
HUMAN RESOURCES = $604850 / 0.99
= $610960 (ROUNDED)
BY PUTTING THE VALUE OF HUMAN RESOURCES IN EQUATION (2)
COMPUNTING = $758500 + 10%($610960)
COMPUNTING = $758500 + $61096
= $819596
ALLOCATION OF HR DEPARTMENT COST
($610960 * 55%)
($610960 * 35%)
ALLOCATION OF COMPUTING DEPARTMENT COST
($819596 * 50%)
($819596 * 40%)
PRODUCT OF SERVICE DEPOSIT LOANALLOCATION OF HR DEPARTMENT COST
($610960 * 55%)
($610960 * 35%)
$336028 $213836ALLOCATION OF COMPUTING DEPARTMENT COST
($819596 * 50%)
($819596 * 40%)
$409798 $327838 TOTAL COST ALLOCATED TO EACH DEPARTMENT $745826 $541674Related Questions
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