Question

Cooper Ltd. has 2 operating divisions: domestic sales and international sales. They also have 2 support...

Cooper Ltd. has 2 operating divisions: domestic sales and international sales. They also have 2 support divisions: accounting support and human resources support. For the past year, Cooper’s cost records show the following information:

Support Divisions Operating Divisions
Account’g Support Human Resources Support Domestic Sales Inter-national Sales Total
Budgeted costs incurred before any interdivision cost allocations $500,000 $600,000 $8,400,000 $7,500,000 $17,000,000
Support work supplied by Accounting (based on # of employees) -        20% 40% 40% 100%
Support work supplied by Human Resources (based on # of staffing actions) 10% -        60% 30% 100%

Allocate the 2 support divisions’ costs to the operating divisions using the Reciprocal Method

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Answer #1

Answer with working notes is given below

please note decimals are rounded off to nearest whole number

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