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Math Help - monthly costs vs Direct costs

  1. #1
    Super Member bigwave's Avatar
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    Cool monthly costs vs Direct costs

    Suppose the development dept of a firm charges 10% of its total monthly costs to the promotional dept, and the promotional dept charges 5% of its total monthly costs to the development dept.
    If the direct costs of the development dept. are $19895 and the direct costs of the promotional dept are $10000, find the total costs for each dept.
    Ans. Devel. = $20,497, promo. = $12,049

    I am just beginning to study business math but on this question didn't know how to use the direct costs to effect the total costs.

    .10(19895) + 10000 i thot would be the total costs of the promo dept but its not.
    so need help knowing how to set this up
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  2. #2
    MHF Contributor
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    Re: monthly costs vs Direct costs

    define:
    d = total total costs of development dept
    p = total costs of the promotional dept

    The total costs for each department are:
    the direct costs for that department
    plus some percentage of the other departments total costs

    So you can write:
    d= 19895 + 0.05p
    p= 10000 + 0.1d

    This is a set of simultaneous equations, solve for d and p. This gives the answers you supplied
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