Support Departments	Producing Departments
	Personnel	Maintenance	Fabrication	Assembly
Budgeted overhead	$160,000	$288,000	$560,000	$640,000
Direct labor hours	8,000	10,000	32,000	40,000
Machine hours	12,000	15,000	48,000	32,000
Number of employees	16	20	60	100

The company does not divide costs into fixed and variable components. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours.

Predetermined overhead rates for fabrication and assembly are based on direct labor hours. (Round to the nearest dollar).

1)If the reciprocal method is used, the simultaneous equations to allocate the support department costs would be

Answer

Reciprocal method (ignore allocation of support depts. To its own self):

P = $160,000 + (12,000/92,000)M

P= $160,000 + 0.1304M

M = $288,000 + (20/180)P

M = $288,000 + 0.1111P

2). If the reciprocal method is used, the TOTAL amount of maintenance costs to be allocated would be (Hint: Use your answer in Q14 and in your calculation round-off appropriate figures to 4 decimal places. The final answer however has to be rounded-off to the nearest whole number)

Answer

M = $288,000 + 0.1111($160,000 + 0.1304)M

M= $288,000 + $17,760 + 0.0145M

M-0.0145M = $305,760

0.9855M = $305,760

M = $305,760/0.9855

M= $310,259

My question is, please explain how we got these answers so i can understand