Question

Jamison Company uses the reciprocal services method to allocate support department costs and has gathered the following information:

Jamison Company uses the reciprocal services method to allocate support department costs and has gathered the following formation: Janitorial Department Usage Cafeteria Cutting Assembly Cafetena Department Usage Janitorial Cutting Assembly Janitorial Department costs are $450,000 Cafeteria Department costs are $250,000 What are the correct equations to represent the total Janitorial) costs, (b) the total cafeteria (C) costs, and (c) the rewritten equation substituting into ? a. S Next > Check My Work Submit Test for Grading

Answer 1

a)J = 450000 +(20% * C)

This represent the total cost of Janitorial Department as : 450000 is a direct cost of janitorial department plus 20% of total cost of Cafeteria department allocated to Janitorial department.

b)C =250000+ (50%*J )

This represent the total cost of cafeteria Department as : 250000 is a direct cost of cafeteria department plus 50% of total cost of Janitorial department allocated to cafeteria department.

c)

Substituting the value of C determined in part b in part a

J = 450000 + {20%* [250000+(50%*J)]}

In place of C in equation 1 ,the value of c determined in equation 2 is substituted .