Fox Company Has Two Support Departments (S1 and S2)and Two $\quad$

question 114

Essay

Fox Company has two support departments (S1 and S2)and two producing departments (P1 and P2).Estimated direct costs and percentages of services used by these departments are as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Used by Department }$
$\begin{array}{ccccr}\text { Support Dept. } & \underline{\mathbf{S 1}} & \underline{\mathbf{S 2}} & \underline{\mathbf{P 1}} & \mathbf{P 2} \\\hline \text { S1 } & - & 10 \% & 40 \% & 50 \% \\\text { S2 } & 20 \% & - & 50 \% & 30 \% \\\text { Direct costs } & \$ 4.500 & \$ 8.000 & \$ 10.000 & \$ 15.00\end{array}$
a.Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method.
b.Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method.

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Definitions:

Ration Coupons

Documents or certificates that allow the holder to purchase a certain amount of a product, used especially during shortages to ensure fair distribution.

Government-mandated Increase

A requirement imposed by the government that results in a rise, often relating to wages, prices, or taxes.

Demand and Supply Curves

Graphs used in economics to illustrate the relationship between how much of a good or service is desired by buyers (demand) and how much is available from suppliers (supply) at various prices.

Product Market

A market in which products are sold by firms and bought by households.