Farmer's Market United (FMU) is an umbrella organization for all individuals who are go-getters in home-grown...

  

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Farmer's Market United (FMU) is an umbrella organization for all individuals who are go-getters in home-grown produce, homemade jams/jellies, artisan breads, and other hand-crafted items to be sold on local street corners. It represents a proud group of folks who are trying to keep the small producer and the health- conscious consumer top-of-mind when it comes to filling the refrigerator and pantry. As a large organization that provides a variety of services for its regional member clubs, FMU continually strives to better understand its own profitability. FMU has four key support services to assist its members: Member Services, Social Media, Resource Deployment, and Administrative Services. These four support departments exist for the benefit of the three operating segments, which are organized geographically: East, Central, and West. While the support services primarily assist the operating segments, they also cross over and assist each other. The services offered by the support departments, along with the original cost of each support department, are as follows. Original cost Member Services hours Social Media hours Resource Deployment hours Admin. Services hours Direct Method: Original cost Allocate Member Services Allocate Social Media Allocate Resource Deployment Allocate Admin. Services Total Reciprocal Method: Member Services $20,000 100 100 Member Services $20,000 (20,000) $0 Support Departments Social Media $30,000 200 300 Social Media Support Departments $30,000 (30,000) Resource Deployment $0 $40,000 Support Departments 200 Resource Deployment $40,000 (40,000) $0 Admin. Services $50,000 Admin. Services $50,000 East $0 Operating Segments Not available 600 500 400 500 East 10,000.00 10,666.67 (50,000) 19,230.76 Central Not available 300 Operating Units 500 Operating Departments 500 $8,571.43 $4,285.71 10,000.00 400 Central 13,333.33 West 15,384.62 Not available 500 500 600 400 West $7,142.86 10,000.00 16,000.00 15,384.62 $48,468.86 $43,003.66 $48,527.48 Reciprocal Method: Original costs. Allocate Member Services Allocate Social Media Allocate Resource Deployment Allocate Admin Services Total supporting cost eTextbook and Media Member Services $20,000 B I (25,146.20) U 2,514.62 2,631.58 B I U T₂ T² Ix E $0 Support Departments Social Media T² Ix $30.000 (42,923.98) 5,029.24 7,894.74 $0 Resource Deployment $40,000 (45,263.16) 5,263.16 $0 E H E 플 Admin Services € E M $50,000 $0 East 3 E $- 10.776.94 14,307.99 99 10,058.48 Operating Units Central $- 5,388.47 (50,000) 13,157.89 10,526.32 14,307.99 12,573.10 Compare your cost allocations from the direct and reciprocal methods. Comment on how similar or different they are, and make a recommendation to FMU leadership as to which method it should use for allocating these costs. West 用 á 8,980.79 $- 14,307.99 15,087.72 10,526.32 $48,301.30 $42,795.88 $48,902.82 $140,000 Should FMU consider using the reciprocal method for allocating some of the support service costs while using the direct method for others? Explain. If it did, which support services would you recommend for the reciprocal method? Explain why. T₁ A Total $140,000 á TT ¶ 4 O Word(s) QWord(s) Farmer's Market United (FMU) is an umbrella organization for all individuals who are go-getters in home-grown produce, homemade jams/jellies, artisan breads, and other hand-crafted items to be sold on local street corners. It represents a proud group of folks who are trying to keep the small producer and the health- conscious consumer top-of-mind when it comes to filling the refrigerator and pantry. As a large organization that provides a variety of services for its regional member clubs, FMU continually strives to better understand its own profitability. FMU has four key support services to assist its members: Member Services, Social Media, Resource Deployment, and Administrative Services. These four support departments exist for the benefit of the three operating segments, which are organized geographically: East, Central, and West. While the support services primarily assist the operating segments, they also cross over and assist each other. The services offered by the support departments, along with the original cost of each support department, are as follows. Original cost Member Services hours Social Media hours Resource Deployment hours Admin. Services hours Direct Method: Original cost Allocate Member Services Allocate Social Media Allocate Resource Deployment Allocate Admin. Services Total Reciprocal Method: Member Services $20,000 100 100 Member Services $20,000 (20,000) $0 Support Departments Social Media $30,000 200 300 Social Media Support Departments $30,000 (30,000) Resource Deployment $0 $40,000 Support Departments 200 Resource Deployment $40,000 (40,000) $0 Admin. Services $50,000 Admin. Services $50,000 East $0 Operating Segments Not available 600 500 400 500 East 10,000.00 10,666.67 (50,000) 19,230.76 Central Not available 300 Operating Units 500 Operating Departments 500 $8,571.43 $4,285.71 10,000.00 400 Central 13,333.33 West 15,384.62 Not available 500 500 600 400 West $7,142.86 10,000.00 16,000.00 15,384.62 $48,468.86 $43,003.66 $48,527.48 Reciprocal Method: Original costs. Allocate Member Services Allocate Social Media Allocate Resource Deployment Allocate Admin Services Total supporting cost eTextbook and Media Member Services $20,000 B I (25,146.20) U 2,514.62 2,631.58 B I U T₂ T² Ix E $0 Support Departments Social Media T² Ix $30.000 (42,923.98) 5,029.24 7,894.74 $0 Resource Deployment $40,000 (45,263.16) 5,263.16 $0 E H E 플 Admin Services € E M $50,000 $0 East 3 E $- 10.776.94 14,307.99 99 10,058.48 Operating Units Central $- 5,388.47 (50,000) 13,157.89 10,526.32 14,307.99 12,573.10 Compare your cost allocations from the direct and reciprocal methods. Comment on how similar or different they are, and make a recommendation to FMU leadership as to which method it should use for allocating these costs. West 用 á 8,980.79 $- 14,307.99 15,087.72 10,526.32 $48,301.30 $42,795.88 $48,902.82 $140,000 Should FMU consider using the reciprocal method for allocating some of the support service costs while using the direct method for others? Explain. If it did, which support services would you recommend for the reciprocal method? Explain why. T₁ A Total $140,000 á TT ¶ 4 O Word(s) QWord(s)