Service Allocations Reciprocal Notes.docx - Service...

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___Info systems___ ____Admin____ _____Hilltop_____ ____Pacific_____ 10% 20% 40% 50% 50% 30% Service Allocations: Reciprocal Reciprocal Method: Recognizes all services provided by any service department, including services provided to other service departments. An equation for each service will be used to represent the total cost of the service department being allocated. Recall the following: Total Cost = Direct Cost + Allocated Cost The system of equations is then solved _____simultaneously___ using __matrix_____ __algebra______ . This method is called the reciprocal method because it accounts for cost flows in _both__ __directions___ among service departments that provide services to each other. It is also known as the __simultaneous____ _solution___ method. Demo Problem : Carlyle Coal Company (CCC) is a midsize coal mining company with many departments, but for simplicity we assume that it has only four. Two, Information Systems (S1) and Administration (S2), are service departments. The other two, Hilltop

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