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 Personnel 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 Personnel Department? (Do not round any intermediary calculations. )

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