Hugo,owner of Automated Fabric,Inc. ,is interested in using the reciprocal allocation method.The following data from operations were collected for analysis:
Budgeted manufacturing overhead costs:

Services furnished:
By Maintenance (budgeted labor-hours):

By Personnel (Number of employees serviced):

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

Question

Hugo,owner of Automated Fabric,Inc. ,is interested in using the reciprocal allocation method.The following data from operations were collected for analysis:
Budgeted manufacturing overhead costs:

Services furnished:
By Maintenance (budgeted labor-hours):

By Personnel (Number of employees serviced):

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

Quizplus · Accepted Answer

P = $140,000 + (1800 / 13,900)M
M = $340,000 + (9 / 78)P
M = $340,000 + (9 / 78)× [$140,000 +(1800 / 13,900)M]
M = $340,000 + $16,154 + (0.014942)M
0.985058 M = $356,154
M = $361,556