Matrix algebra. Computer retailer Lowest Price Bargains Ltd. (LPBL) sells computers of all models and sizes at low prices. The company can keep its costs down with very careful cost allocation of both its three operating departments and its three support departments, which are interdependent and consume one another's resources. The three support departments are Corporate Treasury, Corporate Human Resource Management (CHRM), and Information Technology (IT). The three core operating departments are Sales & Marketing, Purchasing, and Consumer Services & Returns. LPBL uses reciprocal cost allocation for its support departments. A table summarizes the cost pools and the cost allocations among all six departments:

REQUIRED 1. Use the matrix algebra function in Excel to calculate the inverse of the coefficient matrix for support departments.
2. Multiply the inverse of the coefficient matrix by the vector of constants to obtain the artificial costs.
3. Calculate the allocation of costs all departments.LO1

Transcribed Image Text:

Vector of Consumption of Support: Constants Support Depts. Operating Departments Supplier of Support Service 4 Cost Corporate Sales & Pools Treasury CHRM IS Mktg. Purchasing Consumer Services & Returns Check ' Corporate Treasury $ 96 0 0.2 0.25 0.15 0.2 0.2 1 CHRM IT 49 0.1 0 0.2 0.25 0.25 0.2 1 156 0.25 0.15 0 0.2 0.2 0.2 1 Operating Departments Sales & Marketing 84 Purchasing 203 Consumer Services & Returns 36 $624