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

Question 95

Essay

Craylon Corp has two service departments,S1 and S2,and two production departments,P1 and P2.
The data for April were as follows:
 Services provided to:  Activity  Costs  S1  S2  P1  P2  S1 $100,00020%40%50% S2 $80,00010%55%25% Fixed Costs  P1 $400,000 P2 $500,000\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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