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
Answer with working notes is given below
please note decimals are rounded off to nearest whole number
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