Required : a. What is the complete reciprocated cost of the Plant Maintenance Department? b. What is the complete reciprocated cost of the Data Processing Department? c. "The direct allocation method incorporates mutual services provided among all support departments." Is this statement true or false? Explain.
Company B is interested in using the reciprocal allocation method. The following data from operations were collected for analysis:
Budgeted
| Plant Maintenance | PM (Support Dept) | $350,000 |
| Data Processing | DP (Support Dept) | $75,000 |
| Machining | M (Operating Dept) | $225,000 |
| Capping | C (Operating Dept) | $125,000 |
Services furnished:
By Plant Maintenance (budgeted labour-hours):
to Data Processing 3,500
to Machining 5,000
to Capping 8,200
By Data Processing (budgeted computer time):
to Plant Maintenance 600
to Machining 3,500
to Capping 600
Required :
a. What is the complete reciprocated cost of the Plant Maintenance Department?
b. What is the complete reciprocated cost of the Data Processing Department?
c. "The direct allocation method incorporates mutual services provided among all support departments." Is this statement true or false? Explain.
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