The Managers of Conch, Inc If the Reciprocal Method Is Used, the Total Costs Allocated

question 67

Multiple Choice

The managers of Conch, Inc. want to determine the most accurate allocation of support department costs to operating departments. To make this allocation, the accounting department has collected the following data: $\begin{array}{llll}&&\text { Services Provided By }\\& \underline{\text { Computer}}&& \underline{\text { Cafeteria} }\\\text { Direct costs } & \$ 55,000 & & \$ 35,000 \\\text { Service provided to: } \\\quad \text { Computer department }&-- & & 15 \%\\ \text { Cafeteria } & 10 \% & &-- \\\text { Operating department 1 } & 50 \% & & 40 \% \\\text { Operating department 1 } & 40 \% & & 45 \%\\\end{array}$

If the reciprocal method is used, the total costs allocated to the operating departments will be:

• A) $61,168
• B) $79,250
• C) $41,117
• D) $90,000

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Definitions:

Occupies Space

A characteristic of matter that refers to the requirement of physical space for an object or substance to exist.

Conductor

A material that permits the flow of electric charges in one or more directions, such as metals.

Valence Electrons

Electrons in the outer shell of an atom that are available for bonding with other atoms.

Nucleus

The center or middle.