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Stormy Corporation has two service departments (S1 and S2) and two production departments (P1 and...

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Accounting

Stormy Corporation has two service departments (S1 and S2) and two production departments (P1 and P2), and uses the step-down method of cost allocation. Management has determined that S1 provides more service to the firm than S2, and has decided that the number of employees is the best allocation base to use for S1. The following data are available:

Department Number of Employees
S1 16
S2 26
P1 58
P2 86

Which of the following statements is (are) true if S1 and S2 have respective operating costs of $273,530 and $343,530?

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