Molten Works Ltd provides the following information about departmental consumption of allocation bases for its 3 support and 2 operating departments. $$\begin{array} { | l | l | c | c | c | c | }
\hline & { \text { Sugport Departments } } &&& { \text { Operating Departments } } \
\hline & \text { Personnel } & \text { Cafeteria } & \text { Maintenarice } & \text { Machining } & \text { Assembly } \
\hline \text { Personnel } & & 10 \% & 20 \% & 30 \% & 40 \% \
\hline \text { Cafeteria } & 5 \% & & 5 \% & 40 \% & 50 \% \
\hline \text { Maintenarice } & 10 \% & 20 \% & & 50 \% & 20 \% \
\hline
\end{array}$$ For the reciprocal method, what proportion of the Cafeteria Department's costs will be allocated to the Machining Department?
A) 44.4%
B) 5%
C) 20%
D) 40%

Question

Molten Works Ltd provides the following information about departmental consumption of allocation bases for its 3 support and 2 operating departments. $$\begin{array} { | l | l | c | c | c | c | } 
\hline &  { \text { Sugport Departments } } &&& { \text { Operating Departments } } \
\hline & \text { Personnel } & \text { Cafeteria } & \text { Maintenarice } & \text { Machining } & \text { Assembly } \
\hline \text { Personnel } & & 10 \% & 20 \% & 30 \% & 40 \% \
\hline \text { Cafeteria } & 5 \% & & 5 \% & 40 \% & 50 \% \
\hline \text { Maintenarice } & 10 \% & 20 \% & & 50 \% & 20 \% \
\hline
\end{array}$$ For the reciprocal method, what proportion of the Cafeteria Department's costs will be allocated to the Machining Department?
A) 44.4%
B) 5%
C) 20%
D) 40%

Quizplus · Accepted Answer

The reciprocal method of cost allocation considers the interdepartmental support provided among support departments before allocating costs to operating departments. In the given table, 40% of the Cafeteria Department's costs are directly allocated to the Machining Department, as indicated in the table. The reciprocal method does not change the direct allocation percentages; it only accounts for the interdepartmental support before these allocations. Therefore, the proportion remains 40%.

Molten Works Ltd Provides the Following Information About Departmental Consumption