Kovacik manufactures two types of piggy banks in two different departments, a plain piggy bank and a javelina bank. The plant is highly automated and contains only two other departments: (1) engineering and design and (2) information systems. Kovacik allocates support department costs according to estimated service use. Estimated information for next year is as follows:

Total allocated costs are assigned to individual units using the production volume.

REQUIRED
A. Determine the estimated total allocated costs for the operating departments using the step- down method.
B. Determine the estimated total allocated cost per unit of the plain piggy bank and the javelina piggy bank under the step-down method.
C. Explain why actual total allocated costs will turn out to be different from the estimated total allocated costs.
D. Determine the estimated total allocated costs for the operating departments using the reciprocal method. Use either simultaneous equations or Excel Solver.
E. Determine the estimated total allocated cost per unit of the plain piggy bank and the javelina piggy bank under the reciprocalmethod

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Support Engineering Information Operating Systems $8,000 Plain Bank Javelina Bank $20,000 and Design Direct costs Services used $2,700 $10,000 Engineering and design Information systems 40% 3000 8,000 10% 50% 50% 4,000 2000 Production volume