QUESTION 29

1. Jane Company has two service departments (S1 and S2) and two user departments (U1 and U2). The company uses the reciprocal method. The following information is available.

   Service Department	Cost allocation Base	Amount of service used by
   		S1	S2	U1	U2
   S1	Machine hours (MH)		1,500 MH	2,500 MH	6,000 MH
   S2	Square footage (SF)	2,000 SF		3,000 SF	5,000 SF

   You do not need to set up the simultaneous equations. Simply assume that:

   Total costs (direct + allocated) costs of S1: $300,000

   Total costs (direct + allocated) costs of S2: $200,000

   How much of the service department costs will be allocated to U1?

   	A.	$127,833
   	B.	$135,000
   	C.	$250,000
   	D.	$163,235