Use the Following Information for the Next 4 Questions

question 26

Multiple Choice

Use the following information for the next 4 questions.
The accountants for Brock, Inc. are preparing the operating departments overhead budgets. The maintenance department direct costs are $12,000, and the administration department direct costs are $54,000. The following data have been collected about use of services: (based on number of employees)
-Assume the reciprocal method. The equation to express the full cost of the maintenance department is

• A) Maintenance = $12,000 + (0.50 × Administration)
• B) Maintenance = $12,000 + (0.20 × $54,000)
• C) Maintenance = $12,000 + (0.20 × Administration)
• D) Maintenance = $12,000 + (0.25 × $54,000)

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Definitions:

Mutually Beneficial Transactions

Economic exchanges where both parties gain value or benefit from the transaction.

No-Tax Equilibrium

A market situation where goods or services are exchanged without the imposition of taxes, leading to an unaltered allocation of resources.

Elastic Demand

The case in which the price elasticity of demand is greater than 1.

Excise Tax

A tax levied on specific goods, services, or transactions, often with the aim of discouraging their use or raising revenue.