davis snowflake and co

Support department cost allocationreciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Department cost Maintenance Department 800 $2,000 $36,000 Security Department 2,000 $1,670 $16,000 Cutting Department 7,200 $2,500 $64,000 Sewing Department 10,800 $5,500 $82,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Production departments' total costs Feedback Check My Work Cutting Department Sewing Department The reciprocal services method considers all inter-support-department service, and thus is the most accurate of the three support department allocation methods. The proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated must be determined. Then, the support department costs are allocated simultaneously among the departments.