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

What is the complete reciprocated cost of the Maintenance Department? (Do not round any intermediary calculations.)
A) $361,556
B) $356,154
C) $340,000
D) $0

Question

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

What is the complete reciprocated cost of the Maintenance Department? (Do not round any intermediary calculations.)
A) $361,556 
B) $356,154 
C) $340,000 
D) $0

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

Hugo, Owner of Automated Fabric, Inc