The XYZ Manufacturing Company Has Two Support Activity Pools, Accounting

question 7

Multiple Choice

The XYZ Manufacturing Company has two support activity pools, Accounting (A) and Human Resources (H) . Costs for each totaled $420,000 and $270,000 respectively. 20% of the Human Resource costs are consumed by the Accounting department and 10% of the Accounting department costs are consumed by the human resource department. If the company is using the reciprocal method of allocating support costs, the total costs for the Accounting department can be stated as:

• A)$420,000 + .10 x ($270,000 + .20 x H)
• B) $420,000 + .20 x ($270,000 +.10 x A)
• C) $420,000 + .10 x ($420,000 + .10 x A)
• D) $420,000 x .20 x ($270,000 + .10 x A)

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