Reciprocal Method of Support Department Cost Allocation
Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.
Support Departments Producing Departments
Human
Resources General
Factory Fabricating Assembly
Direct costs $ $ $ $
Normal activity:
Number of employees
Square footage
The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage.
Now assume that Chekov Company uses the reciprocal method to allocate support department costs.
