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Vision Books, an online book retailer, has two operating departments corporate sales and consumer salesand two support departmentshuman resources and information systems. i (Click the icon to view additional information.) The following data are available for September 2020: E: (Click the icon to view the data.) (Click the icon to view the direct allocation data.) (Click the icon to view the step-down allocation data.) Read the requirements. .. Requirement 1. Describe the key features of the reciprocal method. Interdepartmental relationships The reciprocal allocation method explicitly includes the mutual services provided fully incorporated into the support department cost allocations. - More Info Each sales department conducts merchandising and marketing operations independently. Vision Books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The controller of Vision Books reads a widely used textbook that states that "the reciprocal method is conceptually the most defensible." He seeks your assistance. Print Done - Data Table A B 1 SUPPORT DEPARTMENTS Human Information Resources Systems D E OPERATING DEPARTMENTS Corporate Consumer Sales Sales $ 90,000 $ 227,000 $ 993,000 $ 485,000 2 Budgeted costs incurred before any 3 interdepartment cost allocations Support work supplied by human 4 resources department 5 Budgeted number of employees Support work supplied by information 6 systems department Budgeted processing time (in 7 minutes) 0 20 44 36 400 ol 2,520 1,080 - X Direct allocation data HR Costs incurred Allocation of HR costs Allocation of Info. Systems costs Total budgeted costs of operating departments Support Departments Operating Departments Info. Systems Corporate Consumer Total $ 90,000 $ 227,000 $ 993,000 $ 485,000 $ 1,795,000 (90,000) 49,500 40,500 (227,000) 158,900 68,100 0 $ 0 $ 1,201,400 $ 593,600 $ 1,795,000 - X Step-down allocation data Support Departments Operating Departments HR Info. Systems Corporate Consumer Total 90,000 $ 227,000 $ 993,000 $ 485,000 $ 1,795,000 (90,000) 18,000 39,600 32,400 $ Costs incurred Allocation of HR costs 0 245,000 Allocation of Info. Systems costs (245,000) 171,500 73,500 $ 0 $ 1,204,100 $ Total budgeted costs of operating departments 590,900 $ 1,795,000 *Proportions for services provided to other support departments: human resources (HR), 0.20000; information sytems (IS), 0.10000. x Requirements 1. Describe the key features of the reciprocal method. 2. Allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method. Use (a) linear equations and (b) repeated iterations. 3. In the case presented in this exercise, which method (direct, step-down, or reciprocal) would you recommend? Why? Print Done

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