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Company Y has two service departments DA and DB, and two production departments, P1 and P2. Services provided to: Departments Costs DA $100,000 DB $50,000

Company Y has two service departments DA and DB, and two production departments, P1 and P2.

Services provided to:

Departments

Costs

DA

$100,000

DB

$50,000

P1

P2

15%

20%

Required:

Set up algebraic equations in linear form for each department to express reciprocal relationship

Department A (DA) and Department B (DB)

A.

DA = $100,000 + 0,05 DB and

DB = $50,000 + 0,05 DA

B.

DA = $100,000 + 0,15 DB and

DB = $50,000 + 0,2 DA

C.

DA = $100,000 + 0,2 DB and

DB = $50,000 + 0,15 DA

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