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When using the reciprocal method to allocate support costs, which of the following equations represents the two algebraic expressions needed for the total costs of a Custodial Department (C) that includes not only $120,000 of direct costs but also 15% of the Maintenance Departments (M) cost and the Maintenance Department that consists of $10,000 of direct costs and $40% of the Custodial Department?   Question options:   a)  C = $120,000 + (.15 x M) and M = $10,000 + (.40 x C).   b)  C = $120,000 + (.15 ÷ M) and M = $10,000 + (.40 ÷ C).   c)  C = $120,000 – (.15 x M) and M = $10,000 – (.40 x C).   d)  C = ($120,000 x .15) + M and M = ($10,000 x .40) + C.

When using the reciprocal method to allocate support costs, which of the following equations represents the two algebraic expressions needed for the total costs of a Custodial Department (C) that includes not only $120,000 of direct costs but also 15% of the Maintenance Departments (M) cost and the Maintenance Department that consists of $10,000 of direct costs and $40% of the Custodial Department?   Question options:   a)  C = $120,000 + (.15 x M) and M = $10,000 + (.40 x C).   b)  C = $120,000 + (.15 ÷ M) and M = $10,000 + (.40 ÷ C).   c)  C = $120,000 – (.15 x M) and M = $10,000 – (.40 x C).   d)  C = ($120,000 x .15) + M and M = ($10,000 x .40) + C.

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter11: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 4CDQ: How would each of the following costs be classified if units produced is the activity base? a....
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When using the reciprocal method to allocate support costs, which of the following equations represents the two algebraic expressions needed for the total costs of a Custodial Department (C) that includes not only $120,000 of direct costs but also 15% of the Maintenance Departments (M) cost and the Maintenance Department that consists of $10,000 of direct costs and $40% of the Custodial Department?

 

Question options:

 

a) 

 C = $120,000 + (.15 x M) and M = $10,000 + (.40 x C).
 

b) 

 C = $120,000 + (.15 ÷ M) and M = $10,000 + (.40 ÷ C).
 

c) 

 C = $120,000 – (.15 x M) and M = $10,000 – (.40 x C).
 

d) 

 C = ($120,000 x .15) + M and M = ($10,000 x .40) + C.
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