Gray Enterprises Has Two Support Departments (S1 and S2)and Two $\quad$

question 3

Essay

Gray Enterprises has two support departments (S1 and S2)and two producing departments (A and B).
The distribution of services by the support departments is as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { ServicesProvided to }$
$\begin{array}{ccccc}\text { ServicesProvided from } & \underline{\text { S1 }} & \underline{\mathbf{S 2}} & \underline{\mathbf{A}} & \underline{\mathbf{B}} \\\text { S } 1 & - & 8 \% & 74 \% & 18 \% \\\text { S } 2 & 21 \% & - & 47 \% & 32 \%\end{array}$ Total department costs for the support and producing departments are as follows:
$$\begin{array} { l l } \mathbf { S } 1 & 558,000 \\\text { S2 } & 124,000 \\\text { A } & 712,000 \\\text { B } & 568,000\end{array}$$ Find the amount of total costs for A and B using the reciprocal method.

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Definitions:

Sale of Equipment

The process of selling off business equipment, often recognized as a financial transaction that can result in a gain or loss in accounting records.

Direct Method

A cash flow statement reporting approach that presents major classes of gross cash receipts and payments, providing a clearer view of cash flows from operating activities.

Accrual Basis

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.