The Following Is a System of Simultaneous Linear Equations to Allocate

question 127

Multiple Choice

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.
$$\begin{array} { l c c } \text { Department } & \text { Direct Costs } & \text { Label } \\\text { Subassemblies } & \${ 5 5 0 , 0 0 0 } & \text { P1 } \\\text { Final assembly } & 775,000 & \text { P2 } \\\text { Marketing } & 285,000 & \text { P3 } \\\text { Building occupancy } & 85,000 & \text {S 1 } \\\text { Research \& development } & 120,000 & \text {S2 } \\\text { Supervision } & 45,000 & \text {S 3 }\end{array}$$
Use of services by other departments is as follows.

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The equation for department S3 (supervision) is:

• A) S3 = $45,000 + 0.90S1 + 0.10S2.
• B) S3 = $45,000 + 0.10S1.
• C) S3 = $45,000 + 1.00S1.
• D) S3 = 0.10S1.

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Definitions:

Retaining Null Hypothesis

The decision in hypothesis testing that there is not enough evidence to reject the null hypothesis, implying the observed data does not significantly differ from what was expected.

Alpha (α)

Alpha (α) represents the level of significance in hypothesis testing, defining the threshold for rejecting the null hypothesis.

Critical Value

A critical value is a point on the distribution that represents a threshold above which significant results are considered to occur.

Statistical Hypotheses

Statements made for statistical testing, including a null hypothesis and possibly an alternative hypothesis, concerning the parameters or distribution of a population.