The Accountants for Elliot, Inc

Multiple Choice

The accountants for Elliot, 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: Assume the reciprocal method. The equation to express the full cost of the Maintenance department is:

A) Maintenance = $12,000 + (0.50 × Administration)
B) Maintenance = $12,000 + (0.20 × $54,000)
C) Maintenance = $12,000 + (0.20 × Administration)
D) Maintenance = $12,000 + (0.25 × $54,000)