because the reciprocal method is a bit complicated, you can use this information to determine P and Q and then calculate the allocation to R and S

Remember for the reciprocal method P's costs should be allocated to Q, R and S, and Q's costs should be allocted to P, R and S

Cloverfield Manufacturing produces machined parts for small motors using job-order costing. Its sales are from bidding on orders. There are two support departments and two producing departments. The budgeted costs and the normal activity levels for each department are given below: Supporting departments Producing departments Department P Department Department Department S $200,00 $100,000 $100,000 $50,000 Overhead costs Number of employees Maintenance hours Machine hours Labour hours 200 2,000 30 6,000 9,000 1,000 30 2,000 1,000 1,000 The costs of department P are allocated on the basis of maintenance hours and the costs of department Q are allocated on the basis of number of employees. Departments R and S assign overhead costs on the basis of machine-hours and labour-hours, respectively, The company is preparing a bid on a job that requires three machine-hours per unit produced in department R and no time in department S. The prime costs per unit have been estimated at $67. Under the present system of allocating overhead costs, the overhead cost per unit is $113.33. Typical industry practice is to prepare a bid of full cost plus 20% markup. Required: Determine the bid price per unit for the job if the step method is used to allocate service department costs to the producing departments. Cloverfield Manufacturing allocates department P costs first when using the step method. What are the allocations of costs from support departments and departments R and S, using the reciprocal method? to producing Let P denote the costs to be allocated from department P. Let Q denote the costs to be allocated from department Q. P= $200,000 + 8 = 68 Q Q = $100,000 + 2,000 = 10,000 P Solving for P: P= $200,000 + 8 = 68 x ($100,000 + 2,000 = 10,000 x P) P= 216,868 Q = 143,374