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

Multiple Choice

Howard 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: $\begin{array}{lrrrr}&S1&S2&P1&P2\\\text { Direct dept. costs } & \$ 7,500 & \$ 11,000 & \$ 27,500 & \$ 30,000 \\\text { Number of employees } & 10 & 5 & 20 & 25 \\\text { Space occupied (sq. ft.) } & 1,000 & 500 & 1,500 & 2,500\end{array}$
If Howard used the reciprocal method, the algebraic equation expressing the total costs allocated from S1 is

A) S1 = $7,500 + 0.10S2.
B) S1 = $7,500 + 0.20S2.
C) S1 = $10,000 + 0.20S2.
D) S1 = $10,000 + 0.10S2.