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

Multiple Choice

Oxide Company has two support departments (S1 and S2) and two producing departments (X and Y) . Department S1 serves Departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves Departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively. What is S1's cost equation?

A) S1 = $8,000 + 0.10S2
B) S1 = $8,000 + 0.06S2
C) S1 = $15,000 + 0.10S2
D) S1 = $15,000 + 0.06S2