Rust Company Has Two Support Departments (S1 and S2) and Two

question 16

Multiple Choice

Rust Company has two support departments (S1 and S2) and two producing departments (X and Y) .Department S1 serves Departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%.Department S2 serves Departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%.Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively.
-What is S2's cost equation?

• A) S2 = $15,000 + 0.06S1
• B) S2 = $8,000 + 0.06S1
• C) S2 = $15,000 + 0.10S1
• D) S2 = $8,000 + 0.10S1

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Definitions:

Illusory Promise

A statement that appears to be a promise but does not actually bind the party to any commitment or obligation.

Promissory Estoppel

A legal principle that prevents a party from going back on a promise, even if the promise was not formally agreed upon, if the other party has relied on that promise to their detriment.

Adequate Consideration

Sufficient value or compensation exchanged between parties in a contract, making the agreement legally binding.

Detriment

A state of being harmed or damaged, often used in legal contexts to describe loss or injury.