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E-books, an online book retailer, has two operating departments

E-books, an online book retailer, has two operating departments corporates and consumers and two support department human resources and information systems Each sales department conducts merchandising and marketing operations independently. E-books U S number of employees to locate human resources costs and processing time to allocate information systems costs. The controller of E-books reads a widely used foxtbook that states that the reciprocal method is conceptually the most defensible." He seoks your assistance. The following data are available for September 2013 (Click the loon to view the data.) (Click the icon to view the direct allocation data) (Click the icon to view the step down allocation data) Requirements 1. Describe the key features of the reciprocal method. 2. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method 3. In the case presented in this exercise, which method (direct, step down, or reciprocal) would you recommend? Why? Requirement 1. Describe the key features of the reciprocal method. Interdepartmental relationships Rully incorporated The reciprocal allocation method explicitly includes the mutual services provided into the support department cost allocations Requirements. In the case presented in this exercise, which method (direct, step down, or reciprocal) would you recommend? Why? Recommendation: The because it is more accurate than the other two methods when there are mutual relationships among support departments Why would you recommend this method? O A fully incorporates interdepartmental relationships into the support departments cost allocation OB. It is easy to compute and understand, and being precise is not necessary OC ranks support departments in the order that the allocation is to proceed and partially recognizes the mul services provided 0 Direct location data E-books, an online book retailer has to operating departments corporate and consumer marketing operations independendy, E-books number of employees to allocate human o "The reciprocal method is conceptually the most defensible." He seks your stance. The following dat Click the loon to view the data) Click the loon to view the direct location data) Click the icon to view the step down $ Data Table Costs incurred Allocation of HR costs Allocation of info Systems Oosts Support Department Operating Departments HR Info Systems Corporate Consumer Total 72,700 $ 234,400 03.270 $ MO $ 1,795230 (72700) 43,820 20.080 234400) 27153 108.547 0 5 05 1,160,78 $ 587 1.785230 Total budgeted costs of operating decorate S Support Department Human Information Resources Systems Operating Departments Corporate Consumer Sales Sales 0 Step-down allocation data $ 72,700 5 234.400 $ 99,270 $ 489,860 Budgeted costs incurred before any interdepartment cost allocations Support work supplied by human resources department Budgeted number of employees Support work supplied by information systems department Budgeted processing time in minutes) - 21 4 2 28 Support Departments Operating Departments HR Info Systems Corporate Consumer Total 72,700 234 400 $ 270 $ 480,00 $ 1.786.230 (72700) 71 72 Costs incurred Allocation of HR costs 320 Print Done 251,177 Allocation of Info Systems costs (251,177) 137,004 114,173 Total budgeted costs of operating departments OS 1.168.828 $ 26.400 $ 1.795,230 Proportions for services provided to other support departments: human resources (HRI Q 23077;information sytoms (IS. 0.08333 Click to select your answer Save for Later Print Done

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