Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following set up is a system of simultaneous linear equations to allocate costs using the reciprocal method. Matrix algebra is not required. The following

The following set up 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 $ 550,000 P1
Final assembly 775,000 P2
Marketing 285,000 P3
Building occupancy 85,000 S1
Research & development 120,000 S2
Supervision 45,000 S3

Use of services by other departments is as follows.

User Department
Service Cost Center Sub-assemblies Final Assembly Marketing Building Occupancy R&D Supervision
Bldg. occupancy .30 .25 .20 --- .15 .10
R&D .50 .50 --- --- --- ---
Supervision .20 .30 .20 .10 .20 ---

The equation for department S3 (supervision) is:

S3 = $45,000 + .90S1 + .10S2.

S3 = .10S1.

S3 = $45,000 + .10S1.

S3 = $45,000 + 1.00S1.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis

Authors: Madhav, Charles, Srikant

15th Edition

933254221X, 978-9332542211

More Books

Students also viewed these Accounting questions

Question

Describe the planned-change model

Answered: 1 week ago