A hotel company has two service departments, IT and Engineering, and two operating departments, Food and Beverage $($F&B$)$ and Rooms. The IT department allocates its overhead based on the number of computers and Engineering allocates its overhead based on square footage. The company uses the reciprocal allocation method. The company accountant has obtained the following information on four departments.

IT Engineering F&B Rooms Total

Overhead $$100,000$ $$200,000$ $$800,000$ $$900,000$ $$2,000,000$

Computers $105040100$

Square feet $5002,0007,50010,000$

How much of IT$$s overhead should be allocated to the F&B department?

 

Answer rating: 100% (QA)

To allocate ITs overhead to the FB department using the reciprocal allocation method we ... View the full answer