Barstow Manufacturing Company has two service departments — product design and engineering support, and two production departments — assembly and finishing. The distribution of each service department's efforts to the other departments is shown below:The total cost accumulated in the assembly department using the reciprocal method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):
A) $1,890,000.
B) $627,143.
C) $682,551.
D) $1,062,857.
E) $1,007,449.

Question

Barstow Manufacturing Company has two service departments — product design and engineering support, and two production departments — assembly and finishing. The distribution of each service department's efforts to the other departments is shown below:The total cost accumulated in the assembly department using the reciprocal method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):
A) $1,890,000. 
B) $627,143. 
C) $682,551. 
D) $1,062,857. 
E) $1,007,449.

Quizplus · Accepted Answer

Using the reciprocal method, we can calculate the percentage each department contributes to the other departments:

Product Design and Engineering Support:
- Contribution to Assembly = 40%
- Contribution to Finishing = 30%
- Total Cost = $400,000

Engineering Support:
- Contribution to Assembly = 60%
- Contribution to Finishing = 20%
- Total Cost = $200,000

We can then use these percentages to allocate the service department costs to the production departments:

Assembly Department:
- Product Design and Engineering Support = $400,000 x (40% / 100%) = $160,000
- Engineering Support = $200,000 x (60% / 100%) = $120,000
- Direct Costs = $1,200,000
- Total Cost = $1,480,000

Finishing Department:
- Product Design and Engineering Support = $400,000 x (30% / 100%) = $120,000
- Engineering Support = $200,000 x (20% / 100%) = $40,000
- Direct Costs = $700,000
- Total Cost = $860,000

Therefore, the total cost accumulated in the assembly department is $1,480,000.

Barstow Manufacturing Company Has Two Service Departments — Product Design