The equation used to represent total departmental costs using the reciprocal method is: total department costs equals direct costs of the department minus the service costs to be allocated to the department.

Question

Quizplus · Accepted Answer

The reciprocal method involves allocating service department costs to both operating departments and other service departments, accounting for interdepartmental services. The equation for total departmental costs includes direct costs plus allocated service costs, not minus.

The Equation Used to Represent Total Departmental Costs Using the Reciprocal