KAB, Inc. has two service departments (S1 and S2) and two production departments (P1 and P2). Information from the most recent year shows the following for each department: S1 S2 P1 P2
Direct overhead $30,000 $20,000 $55,000 $45,000
Allocated overhead 5,000 2,500 12,500 10,000
Machine hours 2,00 800
Square feet 3,000 1,000
KAB allocates S1 to the production departments based on square feet and S2 based on machine hours. How much of S1’s overhead is allocated to P2?
a. $7,500
b. $8,750
c. $11,667
d. $28,000

(4 points) suppose the production function in the solow model is given by yt = ak¯ 3/4 t l 1/4 t . (a) what are the five equations and five unknowns that summarize the solow model? (b) show the transition dynamics in the solow model if ¯sy0 < ¯dk0. make sure you label the axes, curves, initial level of capital and steady-state level of capital. (c) solve for capital, output, capital per person, and output per person in the steady state. (d) if a¯ = 2, l¯ = 4, ¯s = 0.2, and ¯d = 0.05, calculate the steady-state level of capital and output per person.

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