Hugo, owner of Automated Fabric, 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 Personnel Department? (Do not round any intermediary calculations.)
A) $170,000
B) $208,140
C) $180,000
D) $213,012

Question

Hugo, owner of Automated Fabric, 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 Personnel Department? (Do not round any intermediary calculations.)
A) $170,000 
B) $208,140 
C) $180,000 
D) $213,012

Quizplus · Accepted Answer

P = $180,000 + (1000 / 13,100) M
M = $350,000 + (6 / 67) P
M = $350,000 + (6 / 67) × [$180,000 +(1000 / 13,100) M]
M = $350,000 + $16,119 + (0.006836) M
0.993164 M = $366,119
M = $368,639
P = $180,000 + (1000 / 13,100) M
P = $180,000 + (1000 / 13,100) ($368,639)
P = $208,140

Hugo, Owner of Automated Fabric, Inc