Answer (D) is correct . The reciprocal method allocates service department costs to other service departments as well as to production departments by means of simultaneous equations, as shown below. Thus, total service cost allocated to P2 is $23,051 [($31,224 ¡Á 40%) + ($21,122 ¡Á 50%)]. ? S1 = $27,000 + .2S2 ? $27,000 + [.2($18,000 + .1S1)] $27,000 + $3,600 + .02S1 .98S1 = $30,600 S1 = $31,224 S2 = $18,000 + .1($31,224) $18,000 + $3,122 S2 = $21,122Answer (A) is incorrect because The amount of $19,800 equals the sum of 40% of S1’s preallocation costs and 50% of S2’s preallocation costs.
Answer (B) is incorrect because The amount of $21,949 is the total service cost allocated to P1.
Answer (C) is incorrect because The amount of $22,500 equals the average of the preallocation costs of S1 and?S2.
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What are the total allocated service department costs to P2 if the company uses the reciprocal method of allocating its service department costs???(Round calculations to the nearest whole number.)