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.DepartmentDirect CostsLabelSubassemblies$570,000P1Final assembly795,000P2MarketingBuilding occupancy305,000P3105,000S1Research & development140,000S2Supervision65,000S3Use of services by other departments is as follows.User DepartmentsSub-FinalBuildingService Cost CenterassembliesAssemblyMarketingОссирancyR&DSupervisionBuilding occupancy0.300.200.200.150.15R&D0.500.50------Supervision0.200.300.200.200.10The equation for department P3 (marketing) is:Multiple ChoiceP3 = $305,000 + 0.50S1 + 0.50S3.P3 = $305,000 + 0.20S1 + 0.70S2 + 0.20S3.P3 = $305,000 + 0.20S1 + 0.20S2 + 0.70S3.P3 = $305,000 + 0.20S1 + 0.20S3.

Deapartment costing refers to the process of allocation of total cost incurred to the different…

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 Direct Costs Label Subassemblies $570,000 P1 Final assembly Marketing Building occupancy Research & development 795,000 P2 305,000 P3 105,000 si 140,000 S2 Supervision 65,000 S3 Jse of services by other departments is as follows. User Departments Sub- Final Building Service Cost Center assemblies Assembly Marketing Осcuрancy R&D Supervision Building occupancy 0.30 0.20 0.20 0.15 0.15 --- R&D 0.50 0.50 --- --- --- --- Supervision 0.20 8.30 0.20 0.20 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 Direct Costs Label Subassemblies $570,000 P1 Final assembly Marketing Building occupancy Research & development 795,000 P2 305,000 P3 105,000 si 140,000 S2 Supervision 65,000 S3 Jse of services by other departments is as follows. User Departments Sub- Final Building Service Cost Center assemblies Assembly Marketing Осcuрancy R&D Supervision Building occupancy 0.30 0.20 0.20 0.15 0.15 --- R&D 0.50 0.50 --- --- --- --- Supervision 0.20 8.30 0.20 0.20 0.10

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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ABC Company has an ABC system with three pools: Total cost in cost pool Activity Machine setups Customer service Maintenance $18,500 $5,000 Cost Driver $29,000 #setups O $9,000 #orders not enough information machine- hours $13,000 $6,000 $10,000 Compute total capacity costs allocated to product X. Activity volume (#cost driver units) Product X Product Y Total 45 15 25 20 5 25 65 20 50
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