Only part C The Sonin Company, which makes computers, has two production departm

Question

Only part C The Sonin Company, which makes computers, has two production departments, P1, and P2, and three service departments S1, S2 and S3. Each service departments total cost must be distributed to the production departments and to the other service departments based on their respective usages of the services provided. For each service department listed in the leftmost column of Table 2, the fraction of its total cost assigned to the service and product departments of the firm is given. Set up the system of equations that describes the conditions to be satisfied. Be sure to label your variables including units. Solve this system to determine the total costs of the service departments. Determine the allocation of the total costs of the service departments to the production departments.

Explanation / Answer

Service Overheads Bifurcation Department for Jan S1 S2 S3 P1 P2 Total $ S1 40000 0 4000 2000 16000 18000 S2 30000 3000 0 3000 12000 12000 S3 20000 4000 1000 0 7000 8000 7000 5000 5000 35000 38000

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