Phillip Technologies has two support departments, \(\mathrm{A}\) and \(\mathrm{B}\), that provide services to producing departments, C and D. Direct costs for service departments A and B are \(\$ 250,000\) and \(\$ 300,000\), respectively. The cost accountant estimates the proportion of services provided by the support departments as follows:

a. Draw a sketch of the reciprocal relationships among the various departments. Indicate the percentage of services provided by each support department to other departments.

b. Prepare the algebraic equation that describes the cost of operating each service department. (You do not have to solve the equation.)

Transcribed Image Text:

Service Department A 25% to Department B 40% to Department C 35% to Department D Service Department B 40% to Department A 35% to Department C 25% to Department D