Craylon Corp Has Two Service Departments,S1 and S2,and Two Production

question 79

Essay

Craylon Corp has two service departments,S1 and S2,and two production departments,P1 and P2.
The data for April were as follows:
$$\begin{array} { | l | l | c | c | c | c | } \hline & & { \text { Services provided to: } } \\\hline \text { Activity } & \text { Costs } & \text { S1 } & \text { S2 } & \text { P1 } & \text { P2 } \\\hline \text { S1 } & \$ 100,000 & & 20 \% & 40 \% & 50 \% \\\hline \text { S2 } & \$ 80,000 & 10 \% & & 55 \% & 25 \% \\\hline & \text { Fixed Costs } & & & & \\\hline \text { P1 } & \$ 400,000 & & & & \\\hline \text { P2 } & \$ 500,000 & & & & \\\hline\end{array}$$ Required:
a.Set up algebraic equations in linear form for each activity.
b.Determine total costs for each department by solving the equations from part (a)using the reciprocal method.

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Definitions:

Outstanding Stock

Outstanding stock refers to the total shares of a company held by all its shareholders, including share blocks held by institutional investors and restricted shares.

Revenue Enhancement

Strategies or activities undertaken by a company to increase its sales and revenue streams.

Synergistic Benefits

Advantages gained from combining resources or efforts, resulting in a greater outcome than would be the case if working separately.

Asset Write-ups

Asset write-ups refer to the increase in the book value of assets to reflect their current market values, usually following a revaluation of assets.