The Following Set Up Is a System of Simultaneous Linear

question 90

Multiple Choice

The following set up 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. $$\begin{array} { | l | r | r | } \hline \text { Department } & \text { Drect Costs } & \text { Label } \\\hline \text { Subassemblies } & \$ 550,000 & \mathrm { P } 1 \\\hline \text { Final assembly } & 776,000 & \mathrm { P } 2 \\\hline \text { Marketing } & 285,000 & \mathrm { P } 3 \\\hline \text { Building occupancy } & 85,000 & S1 \\\hline \text { Research\&development } & 120,000 & \mathrm {~S} 2 \\\hline \text { Supervision } & 45,000 & \mathrm { S3 } \\\hline\end{array}$$
Use of services by other departments is as follows.
: The equation for department P1 (subassemblies) is

• A) P1 = $550,000 + .25P2 + .20P3 + .15S2 + 10S3.
• B) P1 = $550,000 + .30S1 + .50S2 + .20S3.
• C) P1 = .30S1 + .50S2 + 20S3.
• D) P1 = .30S1 + .50S.

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Definitions:

Drawer

In a transaction involving a check or draft, the drawer is the party that writes and signs the check, ordering the bank to pay a specified sum to the payee.

Depositor's Account

An account maintained at a bank or other financial institution where funds are held in the depositor's name and can include both checking and savings accounts.

Stop-Payment Order

A request made to a bank to cancel a check or payment that has not been processed yet.

Bankruptcy Petition

A formal request filed by an individual or business entity declaring inability to pay outstanding debts, seeking relief through bankruptcy court.