Hugo, owner of Automated Fabric, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis:
Budgeted manufacturing overhead costs:
Maintenance | M (Support Dept) | $400,000 |
Personnel | P (Support Dept) | $150,000 |
Weaving | W (Weaving Dept) | $620,000 |
Colorizing | C (Colorizing Dept) | $360,000 |
Services furnished:
By Maintenance (budgeted labor-hours):
By Personnel (Number of employees serviced):
Which of the following linear equations represents the complete reciprocated cost of the Personnel Department?
◦ P = $400,000 - $150,000 (1000 / 13,100) M
◦ P = (1000 / 13,100) M
◦ P = $150,000 + (1000 / 13,100) M
◦ P = $150,000