Use the Following Information for the Next 4 Questions

question 74

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)
-Using the reciprocal method, the total costs allocated to the three operating departments from the support departments is

• A) $66,000
• B) $84,000
• C) $59,368
• D) $60,000

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Definitions:

Transfer Price

The price at which goods or services are transferred between departments or affiliated entities within the same organization.

Divisional Managers

Managers who are responsible for overseeing and directing a division within a company, typically with responsibility for profit and loss.

Profit Centers

Segments within a company that are responsible for generating revenue and profit, often evaluated separately to analyze their performance.

Operations Margin

An indicator of profitability, calculated as the ratio of operating income to net sales, reflecting the efficiency of a company's operations.