The Accountants for Brock, Inc

question 72

Multiple Choice

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: Percent of Services Used By
Support Departments Operating Departments
Maint- Admin-
Enance istration Op1 Op2 Op3
Services Supplied By:
Maintenance -- 25% 50% 12.5% 12.5%
(based on square metres)
Administration 20% -- 40% 20% 20%
(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:

Marginal Revenue Product

The additional revenue a firm earns by employing one more unit of input, like labor or capital, in the production process.

Wage Rate

The amount of compensation a worker receives for performing a service, typically measured per hour or unit of work.

Employment

The state of having a paid job or being engaged in a productive activity.

Marginal Wage Cost

The additional cost incurred by an employer for hiring one more unit of labor.