rayzon Corportion 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 $100,000 20% 40% 50% S2 $80,000 10% 55% 25% Fixed Costs P1 $400,000 P2 $500,000 Required: a. Set up algebraic equations in linear form for each activity. Page 4 of 6 b. Determine total costs for each department by solving the equations from part (a) above using the reciprocal method.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Crayzon Corportion 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 $100,000 20% 40% 50%
S2 $80,000 10% 55% 25%
Fixed Costs
P1 $400,000
P2 $500,000
Required:
a. Set up algebraic equations in linear form for each activity.
Page 4 of 6
b. Determine total costs for each department by solving the equations from part
(a) above using the reciprocal method.
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