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	R&D	Wireless	Digital
TS		20%	50%	30%
R&D	30%		25%	45%

Determine the cost allocated to:

Wireless Communications using the reciprocal method

Digital Communications using the reciprocal method