The following is a system of simultaneous linear equations to allocate costs using the reciprocal method. Matrix algebra is not required. The following costs were incurred in three operating departments and three service departments in Westmoreland Company. Department Subassemblies Final assembly Marketing Building occupancy Research and development Supervision Use of services by other departments is as follows. Service Cost Center Building occupancy R&D Direct Costs $ 563,000 788,000 298,000 98,000 133,000 58,000 Multiple Choice Supervision The equation for department P2 (final assembly) is: P2 = 0.2051 -0.5052 -0.3053. Sub- assemblies Final Assembly Marketing 0.40 0.15 0.50 0.30 Label P1 P2 P3 S1 S2 $3 O P2 = $788,000 - 0.2051 -0.5052 -0.3053. P2 = $788,000 - 0.30S1-0.50S2 -0.1553. 0.20 0.50 0.30 P2 = $788,000 -0.20P2-0.15P3 -0.15S2-0.10S3. User Departments 0.10 Building Occupancy --- 0.20 R&D 0.15 0.10 Supervision 0.10
The following is a system of simultaneous linear equations to allocate costs using the reciprocal method. Matrix algebra is not required. The following costs were incurred in three operating departments and three service departments in Westmoreland Company. Department Subassemblies Final assembly Marketing Building occupancy Research and development Supervision Use of services by other departments is as follows. Service Cost Center Building occupancy R&D Direct Costs $ 563,000 788,000 298,000 98,000 133,000 58,000 Multiple Choice Supervision The equation for department P2 (final assembly) is: P2 = 0.2051 -0.5052 -0.3053. Sub- assemblies Final Assembly Marketing 0.40 0.15 0.50 0.30 Label P1 P2 P3 S1 S2 $3 O P2 = $788,000 - 0.2051 -0.5052 -0.3053. P2 = $788,000 - 0.30S1-0.50S2 -0.1553. 0.20 0.50 0.30 P2 = $788,000 -0.20P2-0.15P3 -0.15S2-0.10S3. User Departments 0.10 Building Occupancy --- 0.20 R&D 0.15 0.10 Supervision 0.10
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following is a system of simultaneous linear equations to allocate costs using the reciprocal method. Matrix algebra is not required.
The following costs were incurred in three operating departments and three service departments in Westmoreland Company.
Department
Subassemblies
Final assembly
Marketing
Building occupancy
Research and development
Supervision
Use of services by other departments is as follows.
Direct Costs
$ 563,000
788,000
298,000
98,000
133,000
58,000
Multiple Choice
Service Cost Center
Building occupancy
R&D
Supervision
The equation for department P2 (final assembly) is:
Sub-
assemblies Final Assembly Marketing
0.40
0.15
0.50
0.30
P2 = 0.20S1+0.50S2 - 0.30S3.
Label
P1
P2
P3
S1
S2
S3
P2 = $788,000 - 0.2051 -0.50S2 - 0.30S3.
P2 = $788,000 - 0.20P2-0.15P3 - 0.15S2 - 0.10S3.
P2 = $788,000 - 0.30S1-0.50S2 - 0.15S3.
0.20
0.50
0.30
User Departments
---
0.10
Building
Occupancy
---
---
0.20
R&D
0.15
---
0.10
Supervision
0.10
---
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