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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. Department Subassemblies Final assembly Marketing Building occupancy Research & development Direct Costs Label $554, 000 P1 779, 000 289, 000 89, 000 P2 P3 s1 124, 000 49, 000 S2 Supervision S3 Use of services by other departments is as follows. User Departments Sub- Final Building Service Cost Center assemblies Building occupancy Assembly Marketing ancy R&D Supervision 0.30 0.20 0.20 0.20 0.10 R&D 0.50 0.50 ... Supervision 0.30 0.30 0.20 0.10 0.10 The equation for department S1 (building occupancy) is: oTT ry UCcupancy R&D 0.50 0.50 Supervision 0.30 0.30 0.20 0.10 0.10 The equation for department S1 (building occupancy) is: Multiple Cholce S1= 0.10S3. S1 = $89,000 + 1.00S3. S1 = $89,000 + 0.10S3. S1= $89,000 + 0.90S2 + 0.10S3.
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