Angelo Trucking is divided into two operating divisions: Perishable Foods and Household Goods. The company allocates personnel and accounting costs to each operating division.
Personnel costs are allocated on the basis of employees. Accounting costs are allocated on the basis of the number of transactions processed. Allocations for the coming year are based on the following data:
|
Service Departments
|
Operating Divisions
|
|
|
Perishable
|
Household
|
|
Personnel
|
Accounting
|
Foods
|
Goods
|
|
Overhead costs
|
$100,000
|
$205,000
|
$80,000
|
$50,000
|
|
Number of employees
|
20
|
60
|
60
|
80
|
|
Transactions processed
|
2,000
|
200
|
3,000
|
5,000
|
(a) Allocate the service costs using the direct method.
(6) Allocate the service costs using the step method.
(c) Allocate the service costs using the reciprocal method.