Chapter 17 - Problem 1

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Determine the cost allocated to:

1. 1. Wireless Communications using the direct method
2. 2. Digital Communications using the direct method
3. 3. Wireless Communications using the step-down method (allocating TS first)
4. 4. Wireless Communications using the step-down method (allocating R&D first)
5. 5. Wireless Communications using the reciprocal method
6. 6. Digital Communications using the reciprocal method

Problem 1 Nokia Inc. has two user departments, Wireless Communications & Digital Communications. The two support departments are Technical Support (TS) & Research & Development (R&D). The costs incurred in each of these departments are as follows: Wireless Communications $110,000 Digital Communications $60,000 TS $80,000 R&D $90,000 The actual level of support is as follows: Supplied by Used by TS TS R&D Wireless Digital 20% R&D 30% 50% 30% 25% 45% Determine the cost allocated to: 1. 2. Wireless Communications using the direct method Digital Communications using the direct method 3. Wireless Communications using the step-down method (allocating TS first) 4. Wireless Communications using the step-down method (allocating R&D first) 5. Wireless Communications using the reciprocal method 6. Digital Communications using the reciprocal method