Vishu 10The 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.DepartmentSubassembliesFinal assemblyMarketingBuilding occupancyResearch and developmentSupervisionUse of services by other departments is as follows.Direct Costs$ 563,000788,000298,00098,000133,00058,000Multiple ChoiceService Cost CenterBuilding occupancyR&DSupervisionThe equation for department P2 (final assembly) is:Sub-assemblies Final Assembly Marketing0.400.150.500.30P2 = 0.20S1+0.50S2 - 0.30S3.LabelP1P2P3S1S2S3P2 = $788,000 - 0.2051 -0.50S2 - 0.30S3.P2 = $788,000 - 0.20P2-0.15P3 - 0.15S2 - 0.10S3.P2 = $788,000 - 0.30S1-0.50S2 - 0.15S3.0.200.500.30User Departments---0.10BuildingOccupancy------0.20R&D0.15---0.10Supervision0.10---

Reciprocal Method-The reciprocal method uses simultaneous equations to allocate the costs incurred…

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 and development Supervision Use of services by other departments is as follows. Service Cost Center Building occupancy R&D Direct Costs $ 563,000 788,000 298,000 98,000 133,000 58,000 Multiple Choice Supervision The equation for department P2 (final assembly) is: P2 = 0.2051 -0.5052 -0.3053. Sub- assemblies Final Assembly Marketing 0.40 0.15 0.50 0.30 Label P1 P2 P3 S1 S2 $3 O P2 = $788,000 - 0.2051 -0.5052 -0.3053. P2 = $788,000 - 0.30S1-0.50S2 -0.1553. 0.20 0.50 0.30 P2 = $788,000 -0.20P2-0.15P3 -0.15S2-0.10S3. User Departments 0.10 Building Occupancy --- 0.20 R&D 0.15 0.10 Supervision 0.10

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 and development Supervision Use of services by other departments is as follows. Service Cost Center Building occupancy R&D Direct Costs $ 563,000 788,000 298,000 98,000 133,000 58,000 Multiple Choice Supervision The equation for department P2 (final assembly) is: P2 = 0.2051 -0.5052 -0.3053. Sub- assemblies Final Assembly Marketing 0.40 0.15 0.50 0.30 Label P1 P2 P3 S1 S2 $3 O P2 = $788,000 - 0.2051 -0.5052 -0.3053. P2 = $788,000 - 0.30S1-0.50S2 -0.1553. 0.20 0.50 0.30 P2 = $788,000 -0.20P2-0.15P3 -0.15S2-0.10S3. User Departments 0.10 Building Occupancy --- 0.20 R&D 0.15 0.10 Supervision 0.10

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 23E: Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating...

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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 incurred in three operating departments and three service departments in Westmoreland Company. Department Direct Costs Label Subassemblies $570,000 P1 Final assembly 795,000 Р2 Marketing Building occupancy 305,000 P3 105,000 S1 Research & development 140,000 S2 Supervision 65,000 S3 Use of services by other departments is as follows. User Departments Sub- Final Building Service Cost Center assemblies Assembly Marketing Оссирancy R&D Supervision Building occupancy 0.30 0.20 0.20 0.15 0.15 R&D 0.50 0.50 --- --- --- Supervision 0.20 0.30 0.20 0.20 0.10 The equation for department S1 (building occupancy) is: Multiple Choice S1 = $105,000 + 0.20S3. S1 = $105,000 + 0.80S2 + 0.20S3. S1 = $105,000 + 1.00S3. S1 = 0.20S3.
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 Direct Costs Label Subassemblies $570,000 P1 Final assembly 795,000 P2 Marketing Building occupancy 305,000 P3 105,000 S1 Research & development 140,000 S2 Supervision 65,000 S3 Use of services by other departments is as follows. User Departments Sub- Final Building Service Cost Center assemblies Assembly Marketing Оссирancy R&D Supervision Building occupancy 0.30 0.20 0.20 0.15 0.15 R&D 0.50 0.50 --- --- Supervision 0.20 0.30 0.20 0.20 0.10 The equation for department P3 (marketing) is: Multiple Choice P3 = $305,000 + 0.50S1 + 0.50S3. P3 = $305,000 + 0.20S1 + 0.70S2 + 0.20S3. P3 = $305,000 + 0.20S1 + 0.20S2 + 0.70S3. P3 = $305,000 + 0.20S1 + 0.20S3.
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