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 feet. Data on direct department costs, number of employees, and space occupied are as follows:
If Plants used the reciprocal method, the algebraic equation expressing the total costs allocated from S1 is

Question

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 feet. Data on direct department costs, number of employees, and space occupied are as follows:
 If Plants used the reciprocal method, the algebraic equation expressing the total costs allocated from S1 is

Quizplus · Accepted Answer

According to the reciprocal method, the allocation equation for S1 would be:
S1 = (total S1 costs + (S2 space occupied/total space occupied)*total S2 costs)/(number of employees in S1)
Plugging in the given values, we get:
S1 = ($25,000 + (7,000/33,000)*$22,500)/(50)
S1 = $7,500 + 0.20S2
Therefore, the best choice is option C which matches this equation.

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