Alfred, owner of Hi-Tech Fiberglass Fabricators, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis:

What is the complete reciprocated cost of the Plant Maintenance Department? (Do not round any intermediary calculations.)

Question

Alfred, owner of Hi-Tech Fiberglass Fabricators, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis:

What is the complete reciprocated cost of the Plant Maintenance Department? (Do not round any intermediary calculations.)

Quizplus · Accepted Answer

DP = $60,000 + (3600 / 17,000) PM
PM = $380,000 + (800 / 5600) DP
PM = $380,000 + (800 / 5600) × [$60,000 + (3600 / 17,000) PM]
PM = $380,000 + $8571 + (0.030252)PM
0.969748 PM = $388,571
PM = $400,693

Alfred, Owner of Hi-Tech Fiberglass Fabricators, Inc