Employ the reciprocal method of support cost allocation with Excel and evaluate product line profitability:

E$14\mathrm{.}5($LO $2),$ AP Excel Marcus is the operating manager of You Move Me$,$ a company that manufactures three different types of all$-$terrain vehicles: four$-$wheelers, personal watercraft, and snowmobiles. Naturally. Marcus has the opportunity to test all of these products for quality$-$control purposes.

At the end of the year, Marcus needs to perform a profitability analysis for each product line to better evaluate the company's pricing strategy. He has a gut feeling that the company has room to increase selling prices in the snowmobile category, but he wants to see what the financials look like before he makes a case to the CEO. He has gathered the following information. The costs for the three support departments. Payroll, Maintenance, and IT$,$ are allocated to the product lines according to number of employees, maintenance hours used, and IT hours used, respectively.

Required

a$.$ Use Excel to allocate the three support department costs to the three product lines using the reciprocal method.

b$.$ Determine operating income amounts and profit margin percentages for each product line after accounting for the allocated support costs.

c$.$ Assuming competitor profit margins in the snowmobile market are in the range of $6-10\%,$ does it seem like Marcus is correct that his company could consider charging a higher price for its snowmobiles? Explain what additional factors would need to be considered before You Move Me raises its prices for these products.