Allocate the support department costs to the user departments using the reciprocal method.

Downtown Dumbbells is a fitness and nutrition company. Its three major revenue generating areas are group classes, nutrition consulting, and personal training. Carol Birch, a pricing analyst in the Accounting Department, has been asked to develop total costs for the revenue generating areas. These costs will be used as a guide in pricing services to new members. In computing these costs, Birch is considering three different methods of allocating overhead costs-the direct method, the step method, and the reciprocal method. Birch assembled the following data on overhead from its two service departments, the HR Department and the Facilities Department. Total Service Department HR Facilities** Department S1 S2 $25,000 $75,000 User Department Group Consulting Training Classes P1 P2 P3 Budgeted Overhead Number of Employees Sq. Feet 10 2050 155 8000 4000 5000 8000 25,000 *Allocated on the basis of number of employees **Allocated on the basis of sq. feet