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Unformatted text preview: respective departments. Exhibit A1 shows how the initial data for the company might
_________________________________________________________________________________________________________ Exhibit A1. Basic Information for a Reciprocal Cost Allocation
Area occupied (square feet)
Production center costs ($000)
Service center costs ($000)
Total costs ($000) Maintenance 1,000
-- -100 $1,200 Two-Day Next-Day
Delivery Delivery $2,400 1,000
$9,100 _________________________________________________________________________________________________________ Note that there are no square feet shown for maintenance and no labor hours shown for administration. Since
we are using square feet as the basis of allocation for maintenance, and labor hours as the basis of allocation for
administration, we therefore exclude these measures from the two departments. In effect, we do not calculate the
cost of maintaining the maintenance departm...
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This document was uploaded on 03/30/2014.
- Spring '14