The Managers of Conch, Inc

question 138

Multiple Choice

The managers of Conch, Inc. want to determine the most accurate allocation of support department costs to operating departments. To make this allocation, the accounting department has collected the following data: Services Provided By
Computer Cafeteria
Direct costs $55,000 $35,000
Service provided to:
Computer department ---- 15%
Cafeteria 10% ----
Operating department 1 50% 40%
Operating department 2 40% 45%
If the reciprocal method is used, the equation representing the total cost of the computer department is:

• A)Computer costs = $55,000 + (0.15 × cafeteria cost)
• B)Computer costs = $55,000 + (0.10 × cafeteria cost)
• C)Computer costs = $55,000
• D)Computer costs = $55,000 + 0.10 × ($55,000 + 0.10 × computer cost)

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Definitions:

Pelvic

Pertaining to the pelvis.

Abdominal

Relating to the abdomen, the part of the body between the thorax and pelvis containing digestive organs.

Medial

Pertaining to or situated toward the midline of the body or a structure.

Exocrine Glands

Glands that release their secretions through ducts either to the external environment or into the digestive tract, unlike endocrine glands, which secrete hormones directly into the bloodstream.