Cordner Corporation Has Two Production Departments: P1 and P2 and Two

question 105

Multiple Choice

Cordner Corporation has two production Departments: P1 and P2 and two service departments: S1 and S2.Direct costs for each department and the proportion of service costs used by the various departments for the month of July are as follows:
Under the step-method of cost allocation,the amount of costs allocated from S2 to P2 would be:

• A) $88,750.
• B) $50,000.
• C) $62,500.
• D) $53,250.

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Definitions:

Direct Price Discrimination

A pricing strategy where a seller charges different prices to different customers for the same product or service, based directly on the willingness to pay.

Arbitrage

The practice of buying and selling equivalent goods in different markets to take advantage of price differences for profit.

Low-value Group

A classification for items or entities considered to have lesser worth or importance, typically due to lower quality or usefulness.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on various criteria.