Marcus is the operating manager of You Move Me, a company that manufactures three different types of all-terrain vehicles: four wheelers, personal watercraft, and snowmobiles. Naturally, Marcus has the opportunity to test all of these products for quality-control purposes. At the end of the year, Marcus needs to perform a profitability analysis for each product line to better evaluate the company's pricing strategy. He has a gut feeling that the company has room to increase selling prices in the snowmobile category, but he wants to see what the financials look like before he makes a case to the CEO. He has gathered the following information. The costs for the three support departments, Payroll, Maintenance, and IT, are allocated to the product lines according to number of employees, maintenance hours used, and IT hours used, respectively. Sales Four-Wheelers $1,125,000 Personal Watercraft $1,410,000 Snowmobiles $2,000,000 Costs Number of employees Maintenance hours IT hours Pavroll Maintenance $94,000 $115,000 2 3 100 200 150 40 IT $250,000 4 150 220 Four-Wheelers $850,000 20 1,800 800 Watercraft Snowmobiles $1,145,000 $1,750,000 18 27 750 1,300 1,250 900 Required a. Use Excel to allocate the three support department costs to the three product lines using the reciprocal method.
