Answer the following questions using the information below:
Dawn,owner of Fraser Fabric Pty Ltd is interested in using the reciprocal allocation method.The following data from operations were collected for analysis:
Budgeted manufacturing overhead costs:
$\begin{array} { l l l } \text { Maintenance } & \mathrm { M } \text { (Support Dept) } & \$ 150000 \ \text { Personnel } & \mathrm { P } \text { (Support Dept) } & \$ 65000 \ \text { Weaving } & \text { W(Weaving Dept) } & \$ 325000 \ \text { Colourising } & \text { C (Colourising Dept) } & \$ 175000 \end{array}$

Services furnished:
By Maintenance (budgeted labour-hours):
to Persontrel 500
to Weaving 3500
to Colourising 2000

By Personnel (number of employees serviced):
$\begin{array} { l l } \text { Plant Maintenance } & 5 \ \text { Weaving } & 15 \ \text { Colourising } & 10 \end{array}$
-Which of the following linear equations represents the complete reciprocated cost of the Personnel Department?

Question

Answer the following questions using the information below:
Dawn,owner of Fraser Fabric Pty Ltd is interested in using the reciprocal allocation method.The following data from operations were collected for analysis:
 Budgeted manufacturing overhead costs:
$\begin{array} { l l l } \text { Maintenance } & \mathrm { M } \text { (Support Dept) } & \$ 150000 \ \text { Personnel } & \mathrm { P } \text { (Support Dept) } & \$ 65000 \ \text { Weaving } & \text { W(Weaving Dept) } & \$ 325000 \ \text { Colourising } & \text { C (Colourising Dept) } & \$ 175000 \end{array}$

Services furnished:
By Maintenance (budgeted labour-hours):
to Persontrel 500
to Weaving 3500
to Colourising 2000

By Personnel (number of employees serviced):
$\begin{array} { l l } \text { Plant Maintenance } & 5 \ \text { Weaving } & 15 \ \text { Colourising } & 10 \end{array}$
-Which of the following linear equations represents the complete reciprocated cost of the Personnel Department?

Quizplus · Accepted Answer

The reciprocal allocation method requires the use of linear equations to determine the complete reciprocated costs of each department. The formula for the Personnel Department's cost (P) includes a fixed cost of $65,000 and a variable cost based on the percentage of services received from the Manufacturing (M) and Administration (A) departments. Option C correctly includes both components: P = $65,000 + (500/6000)M.

There is no information provided to determine the "best" choice. All four answer options are possible linear equations for the reciprocal allocation method, but option C is the only one that correctly includes both a fixed cost and a variable cost component.

Answer the Following Questions Using the Information Below: Dawn,owner of Fraser

Answer the Following Questions Using the Information Below:
Dawn,owner of Fraser