Reciprocal method cost allocation Excel templatereciprocal method中文Re-apportionment of service department costsAllocation of service department costsSplit off pointActivity-based costingDirect method step down method and reciprocal methodReciprocal (algebraic) method of cost allocation - Accounting ...
文章推薦指數： 80 %
The major advantage of reciprocal method is that it fully takes into account the interdepartmental services. It is therefore considered a more ... Menu Find Home Explanations Exercises Problems Quizzes Calculators Home Explanations Exercises Problems Quizzes Calculators Searchfor: Theallocationofservicedepartmentcostsisincompleteifthemethodusedforcostallocationignoresordoesnotgivefullrecognitiontointerdepartmentalservices.Interdepartmentalservicesareservicesthattwoormoreservicedepartmentsprovidetoeachother.Forexample,consideracasewhereservicedepartmentAprovidesservicetoservicedepartmentB,andinturn,departmentBprovidesservicetodepartmentA. Ifyouhavealreadystudied directmethodandstepmethodofcostallocationyoumayhavenoticedthatthedirectmethodcompletelyignorestheinterdepartmentalservicesandstepmethodgivesthemonlyapartialrecognitionbecauseitallocatescostsforward–neverbackward.Toovercomethisproblem,amethodknownas reciprocalmethod isusedwhichfullyrecognizesinterdepartmentalservicesandprovidesgreaterexactnessinallocatingthecostofaservicedepartmentstootherdepartments.Thereciprocalmethodusesthesimultaneousequationstechniqueandisthereforealsoreferredtoassimultaneousequationsmethodandalgebraicmethodofdepartmentalcostallocation. Example Acompanyhastwoservicedepartmentsandtwoproducingdepartments.Thetwoservicedepartmentsprovideservicenotonlytotwoproducingdepartmentsbutalsooneanother.Thecostsoffourdepartmentsandrelationshipamongthemisshownbelow: Required:Allocatethecostofservicedepartmentstoproducingdepartmentsusingreciprocal/algebraicmethod. Solution Let: Y=$7,260+0.3Z——Eq.1Z=$4,000+0.2Y——Eq.2 SubstitutingthevalueofZinequation1: Y=$7,260+0.3($4,000+0.2Y)Y=$7,260+$1,200+0.06YY–0.06Y=$7,260+$1,2000.94Y=$8,460Y=$8,460/0.94Y=$9,000 SubstitutingthevalueofYinequation2: Z=$4,000+0.2(9,000)Z=$4,000+$1,800Z=$5,800 Distributionsummary: Advantagesanddisadvantagesofreciprocalmethod Themajoradvantageofreciprocalmethodisthatitfullytakesintoaccounttheinterdepartmentalservices.Itisthereforeconsideredamoreaccuratemethodthan directandstepmethod fordepartmentalcostallocation. Themajordisadvantageofreciprocalmethodisthatitismorecomplexwhencomparedwithdirectandstepmethod.Theuseofacomputersoftwarecouldsolvethecomplexityissueinvolvedinthismethodbutthereisnosufficientevidencethatthissolutionhassignificantlyincreasedthepopularityofreciprocalmethod.Moreover,thestepmethodproducesresultsthatareusuallyclosetotheresultsproducedbycomplexreciprocaloralgebraicmethod. MorefromServicedepartmentcosting(explanations): DifferencebetweenserviceandoperatingdepartmentsDirectmethodofcostallocationStepdownmethodofcostallocationReciprocal(algebraic)methodofcostallocationDifferencebetweencostcenterandprofitcenter «Prev Next» ADVERTISEMENT OneCommentonReciprocal(algebraic)methodofcostallocation AnswersheetforthesevicedepartmentandproductionDepartmentforFletcherEnginesoperation Reply Commentnavigation LeaveacommentCancelreply Δ ADVERTISEMENT ADVERTISEMENT ADVERTISEMENT ADVERTISEMENT Gototop
延伸文章資訊
- 1Reciprocal Method of Cost Allocation - Accounting Details
Reciprocal method is a method of allocating service department costs to other departments that gi...
- 2Reciprocal (algebraic) method of cost allocation - Accounting ...
- 3Allocating Service Department Costs with Excel - Strategic Finance
- 4COST ALLOCATION COST ALLOCATION Direct Method
COST ALLOCATION PROBLEM (Direct, Step-Down, & Reciprocal Methods) ... RECIPROCAL. METHOD. DATA. C...
- 5Reciprocal (algebraic) method of cost allocation - Accounting ...
The major advantage of reciprocal method is that it fully takes into account the interdepartmenta...
