Plants Company Has Two Support Departments (S1 and S2)and Two

question 72

Multiple Choice

Plants Company has two support departments (S1 and S2) and two producing departments (P1 and P2) .Department S1 costs are allocated on the basis of number of employees,and Department S2 costs are allocated on the basis of space occupied expressed in square metres. Data on direct department costs,number of employees,and space occupied are as follows:
$\begin{array}{lrrrr}&\text { S 1}& \text { S 2} &\text { P 1} &\text { P 2}\\\text { Direct dept. costs } & \$ 7,500 & \$ 11,000 & \$ 27,500 & \$ 30,000 \\\text { Number of employees } & 10 & 5 & 20 & 25 \\\text { Space occupied (sq. metres.) } & 1,000 & 500 & 1,500 & 2,500\end{array}$
When Plants uses the sequential method,the support department allocated first is the one with the highest percentage of interdepartmental service.The choice of the department allocated first is determined by the comparison of which of the following sets of ratios for S1 and S2,respectively?

• A)5/50; 1,000/5,000
• B)5/60; 1,000/5,500
• C)10/50; 1,000/5,000
• D)10/55; 500/4,500

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Definitions:

Distributive Justice

A concept in ethics and political philosophy concerning the fair allocation of goods, resources, and opportunities among members of society.

Unfettered Free Markets

Economic systems with minimal or no government intervention, where the forces of supply and demand are allowed to determine production, consumption, and price levels freely.

Libertarianism

A philosophical view that holds that individuals’ liberty is fundamentally important and that government must respect its citizens’ rights, understood as “negative” rights (that is, rights to act without interference so long as one’s actions do not interfere with the rights of others). Among the negative rights libertarians defend are the right to keep what one has or has earned, and the right to be free from government interference in all matters except when absolutely necessary to the general good.

Communitarian

Communitarian refers to a philosophical and social ideology emphasizing the importance of community and collective interests above individual rights.