Answer the Following Questions Using the Information Below:
Alfred, Owner $\text { Budgeted manufacturing overhead costs }$

question 5

Multiple Choice

Answer the following questions using the information below:
Alfred, owner of Hi-Tech Fiberglass Fabricators, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis:
$\text { Budgeted manufacturing overhead costs }$
$\begin{array}{lll}\text { Flant Maintenance } & \text { PM (Support Dept) } & \$ 350,000 \\\text { Data Processing } & \text { DP (Support Dept) } & \$ 75,000 \\\text { Machining } & \text { M (Operating Dept) } & \$ 225,000 \\\text { Capping } & \text { C (Operating Dept) } & \$ 125,000\end{array}$

$\text { Services furmished: }$
$\begin{array}{ll}\text { By Plant Maintenance (bud geted labor-hours) : }\\\text { to Data Processing } & 3,500 \\\text { to Machining } & 5,000 \\\text { to Capping } & 8,200\\\text { By Data Processing (bud geted computer time) : }\\\text { to Plant Maintenance } & 600 \\\text { to Machining } & 3,500 \\\text { to Capping } & 600\end{array}$
-What is the complete reciprocated cost of the Plant Maintenance Department?

• A) $393,750
• B) $369,459
• C) $365,000
• D) $375,773

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Definitions:

Salvage Value

The estimated residual value of an asset after it has been fully depreciated and is no longer in use.

Straight-line Method

A technique that evenly distributes the expense of an asset across its lifespan for depreciation calculation.

Discounted Payback

The period it takes for an investment to break even in cash flow terms, adjusted for the time value of money.

Required Return

The minimum gain or profit that investors expect to receive on an investment relative to its risk.