Problem $1$

Samsung has two operating$/$user departments, Gen $4$ & Gen $5.$ The two support departments are Information Technology $($IT$)$ & Product Development $($PD$).$ The costs incurred in each of these departments are as follows:$$

Gen $4$

$$300,000$

Gen $5$

$$480,000$

IT

$$60,000$

PD

$$150,000$

The actual level of support is as follows:

Supplied by

Used by

IT

PD

Gen $4$

Gen $5$

IT

$10\%$

$30\%$

$60\%$

PD

$20\%$

$25\%$

$55\%$

Determine the cost allocated to:

Gen $4$ using the direct method

$(60000*30/90)+(150000*25/80)=66875$

Gen $5$ using the direct method

$(60000*60/90)+(150000*55/80)=143125$

Gen $4$ using the step$-$down method $($allocating IT first$)$

Gen $4$ using the step$-$down method $($allocating PD first$)$

Gen $4$ using the reciprocal method

Gen $5$ using the reciprocal method