Service Department Cost Allocation - Anna Lee

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LO4Cost Allocation: Reciprocal MethodService Department Cost AllocationToFrom(S1)(S2)(P1)(P2)TotalDirect costs(S1)(S2)$ 800,000(2,000,000) a1,200,000 e$ -0-$5,000,0001,000,000 b(6,000,000) f$ -0-$ -0-200,000 c3,000,000 g$3,200,000$ -0-800,000 d1,800,000 h$2,600,000$5,800,000 i$5,800,000 iaTotal costs of S1bCosts allocated from S1 (50% × $2,000,000)c10.0% × $2,000,000d40.0% × $2,000,000eCosts allocated from S2 (20% × $6,000,000)fTotal costs of S2g50% × $6,000,000h30% × $6,000,000I$5,800,000 of service department costs were ultimatelyallocated to production departments.11 - 16
LO4Cost Allocation: Reciprocal MethodComparison of Direct, Step, and Reciprocal MethodsMethod Hilltop Mine Pacific Mine TotalDirectStepReciprocal$3,285,0003,455,0003,200,000$2,515,0002,345,0002,600,000$5,800,0005,800,0005,800,00011 - 17
Page 2: LO1Service Department Cost Allocati
Page 5 and 6: Cost Allocation: Direct Method• D
Page 7 and 8: Cost Allocation: Step Method• The
Page 9 and 10: LO3Cost Allocation: Step MethodServ
Page 11 and 12: Cost Allocation: Reciprocal Method
Page 13 and 14: LO4Cost Allocation: Reciprocal Meth
Page 15: LO4Cost Allocation: Reciprocal Meth
Page 19 and 20: LO5The Reciprocal Methodand Decisio
Page 21 and 22: Allocation of Joint CostsJoint cost
Page 23 and 24: Net Realizable Value MethodFinal sa
Page 25 and 26: Estimating NRV• When no sales val
Page 27 and 28: Physical Quantities Method• Joint
Page 29 and 30: By-products• By-products are outp
Page 31 and 32: Carlyle Coal CompanyFor the Month o
Page 33 and 34: Sell or Process Further• Suppose

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