68) Under which allocation method are one-way reciprocal support services recognized?A) direct methodB) artificial cost methodC) reciprocal methodD) step-down methodAnswer:DDiff: 2 Show Terms:step-down allocation methodObjective:3AACSB:Reflective thinking69) The direct allocation method:DDiff: 3 Terms:direct allocation methodObjective:3AACSB:Reflective thinking70) The step-down allocation method: We have textbook solutions for you! The document you are viewing contains questions related to this textbook. Managerial Accounting Warren/Tayler Expert Verified Terms:step-down allocation methodObjective:3AACSB:Reflective thinking71) The reciprocal allocation method:CDiff: 3 Terms:reciprocal allocation methodObjective:3AACSB:Reflective thinking72) Complete reciprocated costs:A) are less than the support department's own costsB) include the support department's costs plus any interdepartmental cost allocationsC) are used for step-down allocationsD) are also referred to as budgeted costsAnswer:BDiff: 2 Terms:complete reciprocated costsObjective:3AACSB:Reflective thinking18 Answer the following questions using the information below:Jake's Battery Company has two service departments, Maintenance and Personnel. MaintenanceDepartment costs of $160,000 are allocated on the basis of budgeted maintenance-hours.Personnel Department costs of $40,000 are allocated based on the number of employees. Thecosts of operating departments A and B are $80,000 and $120,000, respectively. Data onbudgeted maintenance-hours and number of employees are as follows:Support DepartmentsProductionDepartmentsMaintenanceDepartmentPersonnelDepartmentABBudgeted costs$160,000$40,000$80,000$120,000Budgeted maintenance-hoursNA400480320Number of employees20NA8024073) Using the direct method, what amount of Maintenance Department costs will be allocated toDepartment B?B Diff: 2Terms:direct allocation methodObjective:3AACSB:Analytical skills Recommended textbook solutions
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Intermediate Accounting14th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield 1,471 solutions Financial Accounting4th EditionDon Herrmann, J. David Spiceland, Wayne Thomas 1,097 solutions What are the 3 allocation methods?There are three methods for allocating service department costs: direct, sequential, and reciprocal. The first step of each method is to classify each organizational unit as either an operating or service department.
What is the direct allocation method?The direct allocation method is a technique for charging the cost of service departments to other parts of a business. This concept is used to fully load operating departments with those overhead costs for which they are responsible.
What are the different methods of allocation?When allocating costs, there are four allocation methods to choose from.. Direct labor.. Machine time used.. Square footage.. Units produced.. What are the two common allocation methods?Larger or more complex organizations would typically use either a "two-step" methodology (allocating overhead costs to direct users and to those departments that use the services of the direct users) or reciprocal allocation methodology (allowing for overhead to be allocated back and forth between departments).
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