Exercise 13-31 Name:
Insert your answers in the gray-shaded cells. Insert amounts to be subtracted as negatives.
If an answer is incorrect, the word “wrong” will appear.
Type equation to show how much cost is allocated to each department
S1 =
S2 =
S3 =
S1 S2 S3 RP1
Direct Costs 170,000$ 360,000$ 600,000$
S1 (644,965) 64,497 128,993 193,490$
S2 282,723 (706,808) 212,042 141,362
S3 188,207 282,311 (941,035) 376,414
To RP (4,035)$ –$ – 711,266$
Substitute S1 ($644,965) into the original S2 and S3 equations:
(1) S2 = $360,000 + .10($644,965) + .30S3
(2) S3 = $600,000 + .20($644,965) + .30S2
Simplifying:
(1) S2 = $360,000 + $64,497 + .30S3
S2 = $424,497 + .30S3
(2) S3 = $600,000 + $128,993 + .30S2
S3 = $728,993 + .30S2
Substitute S3 into the equation for S2:
S2 = $424,497 + .30($728,993 + .30S2)
S2 = $424,497 + $218,698 + .09S2
.91S2 = $643,195
S2 = $706,808
Solution
$170,000 + .40S2 + .20S3
$360,000 + .10S1 + .30S3
$600,000 + .20S1 + .30S2
Substitute S3 into the equations for S1 and S2:
(1) S1 = $170,000 + .40S2 + .20($600,000 + .20S1 + .30S2)
(2) S2 = $360,000 + .10S1 + .30($600,000 + .20S1 + .30S2)
Simplifying:
(1) S1 = $170,000 + .40S2 + $120,000 + .04S1 + .06S2
.96S1 = $290,000 + .46S2
S1 = $302,083 + .48S2
(2) S2 = $360,000 + .10S1 + $180,000 + .06S1 + .09S2
.91S2 = $540,000 + .16S1
S2 = $593,407 + .18S1
Substitute S2 into the equation for S1:
S1 = $302,083 + .48($593,407 + .18S1)
S1 = $302,083 + $284,835 + .09S1
.91 S1 = $586,918
S1 = $644,965
Insert your answers in the gray–shaded cells. Insert amounts to be subtracted as negatives.
RP2
257,986$
70,681
94,104
422,771$
Substitute S1 ($644,965) into the original S2 and S3 equations:
(1) S2 = $360,000 + .10($644,965) + .30S3
(2) S3 = $600,000 + .20($644,965) + .30S2
Simplifying:
(1) S2 = $360,000 + $64,497 + .30S3
S2 = $424,497 + .30S3
(2) S3 = $600,000 + $128,993 + .30S2
S3 = $728,993 + .30S2
Substitute S3 into the equation for S2:
S2 = $424,497 + .30($728,993 + .30S2)
S2 = $424,497 + $218,698 + .09S2
.91S2 = $643,195
S2 = $706,808
Substitute S3 into the equations for S1 and S2:
(1) S1 = $170,000 + .40S2 + .20($600,000 + .20S1 + .30S2)
(2) S2 = $360,000 + .10S1 + .30($600,000 + .20S1 + .30S2)
Simplifying:
(1) S1 = $170,000 + .40S2 + $120,000 + .04S1 + .06S2
.96S1 = $290,000 + .46S2
S1 = $302,083 + .48S2
(2) S2 = $360,000 + .10S1 + $180,000 + .06S1 + .09S2
.91S2 = $540,000 + .16S1
S2 = $593,407 + .18S1
Substitute S2 into the equation for S1:
S1 = $302,083 + .48($593,407 + .18S1)
S1 = $302,083 + $284,835 + .09S1
.91 S1 = $586,918
S1 = $644,965