Pardee, Inc

question 8

Multiple Choice

Pardee, Inc. allocates engineering costs on the basis of the supervisor's time and administration costs on the basis of the number of employees. The company's accountant determined that engineering provides more services to administration than administration provides to engineering. The following data have been collected: Support Departments Operating Departments
Engineering Administration Assembly Finishing
Direct costs $25,000 $15,000 $200,000 $350,000
Number of employees 15 10 300 450
Engineering supervisor's time 30% 15% 35% 20%
If the reciprocal method is used, what is the amount of engineering cost that will be allocated to all of the other departments?

• A)$21,456
• B)$24,330
• C)$26,432
• D)$25,331

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Definitions:

Chester Barnard

A business executive and author, known for his contributions to management theory, particularly in the area of organizational and executive functions.

Organizational Behavior

The study of how individuals and groups interact within organizations and the impact of these behaviors on performance and structure.

Representation

The action of speaking or acting on behalf of someone or the state of being so represented.

Leadership

The ability to influence, motivate, and enable others to contribute toward the effectiveness and success of the organizations of which they are members.