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Frenhs Forest Publishing Company Has Two Service Departments,S1 and S2,and \quad

Question 42

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Frenhs Forest Publishing Company has two service departments,S1 and S2,and two production departments,P1 and P2.
The data for May were as follows:
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad  Services provided to: \text { Services provided to: }
 Activity  Costs  S1  S2  P1  P2  S1 $9000010%40%50% S2 $6000020%55%25% Fixed Costs  P1 $360000 P2 $520000\begin{array}{|c|c|c|c|c|c|}\hline \text { Activity } & \text { Costs } & \text { S1 } & \text { S2 } & \text { P1 } & \text { P2 } \\\hline \text { S1 } & \$ 90000 & & 10 \% & 40 \% & 50 \% \\\hline \text { S2 } & \$ 60000 & 20 \% & & 55 \% & 25 \% \\\hline & \text { Fixed Costs } & & & & \\\hline \text { P1 } & \$ 360000 & & & & \\\hline \text { P2 } & \$ 520000 & & & & \\\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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Correct Answer:

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a.S1 = $90 000 + 0.20 (S2)
S2 = $60 000 ...

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