Question 25

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 Maintanace	PM ( Suport Dept)	$370,000
Data Processing	DP ( Suport Dept)	$70,000
machining	M (Operating Dept)	$235,000
Capping	C (Operating Dept)	$110,000

Services furnished:

By plant maintenance (budgeted labor hours)

to data processing	3900
to matching	5100
to capping	8100

By Data Processing (budgeted computer time):

to plant mainteneace	700
to machining	3500
to capping	650

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

a) DP = $70,000 + (700 / 4850) PM

b)DP = $70,000 + (3900 / 17,100) PM

c) DP = $70,000 + (700 / 4850) + $370,000 x (3900 / 17,100)

d) DP = $370,000 + (700 / 17,100) DP