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.

Calculate net and gross pay including overtime, deductions, and withholdings.

Distinguish between current liabilities and long-term debt on balance sheets.

Understand how the social security and Medicare tax rates affect both employees' take-home pay and employers' payroll expenses.

Record the conversion of accounts payable to notes payable through journal entries.

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Definitions:

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities and resources that go into creating them.

Tech Support

A service provided by companies to help customers solve technical problems or issues related to their products or services.

Time-Driven

Refers to processes or activities that are scheduled or executed based on the passage of time.

Customer Support

A service provided by companies to assist customers with their products or services, aiming to resolve issues and improve customer satisfaction.