Which of the following linear equations represents the complete reciprocated cost of the Data Processing Department

ACCOUNTING

Multiple Choice

Alfred, owner of Hi-Tech Fiberglass Fabricators Inc. is interested in using the reciprocal allocation method. The following data from operations were collected for analysis:


Budgeted manufacturing overhead costs:

Plant Maintenance PM (Support Dept) $350,000

Data Processing DP (Support Dept) $ 75,000

Machining M (Operating Dept) $225,000

Capping C (Operating Dept) $125,000


Services furnished:

By Plant Maintenance (budgeted labor-hours):

to Data Processing 3,500

to Machining 5,000

to Capping 8,200

By Data Processing (budgeted computer time):

to Plant Maintenance 600

to Machining 3,500

to Capping 600


Which of the following linear equations represents the complete reciprocated cost of the Data Processing Department?

a. DP= $75,000 + (600/4,700) PM

b. DP= $75,000 + (3,500/16,700) PM

c. DP= $75,000 x (600/4,700) + $350,000 x (3,340/16,700)

d. DP= $350,000 + (600/16,700) DP

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