Problem - 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:
1. Wireless Communications using the direct method
2. Digital Communications using the direct method
3. Wireless Communications using the step-down method (allocating TS first)
4. Wireless Communications using the step-down method (allocating R&D first)
5. Wireless Communications using the reciprocal method
6. Digital Communications using the reciprocal method