Plants Company has two support departments (S1 and S2)and two producing departments (P1 and P2).Department S1 costs are allocated on the basis of number of employees,and Department S2 costs are allocated on the basis of space occupied expressed in square metres. Data on direct department costs,number of employees,and space occupied are as follows:
$\begin{array}{lrrrr}
&\text {S1}&\text {S2}&\text {P1}&\text {P2}\
\text { Direct dept. costs } & \$ 7,500 & \$ 11,000 & \$ 27,500 & \$ 30,000 \
\text { Number of employees } & 10 & 5 & 20 & 25 \
\text { Space occupied }(\mathrm{sq} . \mathrm{m}) & 1,000 & 500 & 1,500 & 2,500
\end{array}$ If Plants used the reciprocal method,what is the algebraic equation expressing the total costs allocated from S1?

Question

Quizplus · Accepted Answer

The reciprocal method considers the mutual services provided among support departments. S1 costs are allocated based on employees, so S1 = $7,500 + (5/25)S2 = $7,500 + 0.20S2.

Plants Company Has Two Support Departments (S1 and S2)and Two