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David W. Young • Management Accounting for Managers • Chapter 1
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To complete the reciprocal allocation, we remove $1,738 from administration and allocate it to the remaining
three cost centers on the basis of labor hours, and we remove $2,690 from maintenance and allocate it to the three
other cost centers on the basis of square footage. The result is that the service center costs are fully allocated to
both the other service centers and the production centers, and the full $9,100 in costs now resides only in the production centers. These allocations are shown in Exhibit A2.
_________________________________________________________________________________________________________ Exhibit A2. Allocation of Service Center Costs to Mission Centers Initial costs ($000)
Maintenance allocation (1)
Administration allocation (2)
Total costs Administration
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This document was uploaded on 03/30/2014.
- Spring '14