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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
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. Label P2 Department Subassemblies Final assembly Marketing Building occupancy Research & development Supervision Direct Costs $552,000 777,000 287,000 87,000 122,000 47,000 Use of services by other departments is as follows. Sub- Service Cost Center assemblies Building occupancy 0.30 R&D 0.50 Supervision 0.20 Final Assembly 0.25 0.50 0.30 User Departments Building Marketing Occupancy 0.15 --- --- 0.10 0.20 R&D 0.20 --- 0.20 Supervision 0.10 --- --- The equation for department P1 (subassemblies) is: Multiple Choice P1 = $552,000+ 0.25P2 +0.15P3 + 0.2052 +0.1053 O P1 = $552,000 +0.3051 +0.5052 +0.2053. P1 = 0.30S1 + 0.50S2 +0.2013. P1 = 0.3081 +0.505
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