The Following Is a System of Simultaneous Linear Equations to Allocate

question 29

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.
$$\begin{array} { l c c } \text { Department } & \text { Direct Costs } & \text { Label } \\\text { Subassemblies } & \$ 5 5 0 , 0 0 0& \text { P1 } \\\text { Final assembly } & 775,000 & \text { P2 } \\\text { Marketing } & 285,000 & \text { P3 } \\\text { Building occupancy } & 85,000 & \text {S 1 } \\\text { Research \& development } & 120,000 & \text {S 2 } \\\text { Supervision } & 45,000 & \text {S 3 }\end{array}$$
Use of services by other departments is as follows.

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The equation for department S1 (building occupancy) is:

• A) S1 = 0.10S3.
• B) S1 = $85,000 + 1.00S3.
• C) S1 = $85,000 + 0.10S3.
• D) S1 = $85,000 + 0.90S2 + 0.10S3.

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Definitions:

Modus Tollens (MT)

A form of logical argument where the denial of the consequent leads to the denial of the antecedent.

Simplification (Simp)

A logical operation that breaks down complex arguments or propositions into simpler components.

Modus Ponens (MP)

A form of valid argument in deductive logic that, if a given premise is true ('if P then Q'), and the antecedent (P) is also true, then the consequent (Q) must be true.

Universal Generalization (UG)

A principle in logic where a statement applies to all members of a category or class.