ii. The first step of the reciprocal services

method involves deriving a simultaneous equation. Let E = Total costs of the

Engineering department; I = Total costs of the Inspection department. Your

casual staff asks you what number she should multiply I by in deriving the

equation for the total cost of the Engineering department.

i. Using the direct

method, calculate the total engineering department costs allocated to the

Assembly Department.

iii. Ignore your answer in part (ii) and

assume that after solving the simultaneous equations, the total cost of the

Engineering department is $250,000.

(ii) Applying the first condition, what is the

proportion

of manufacturing overhead costs that are driven by non-volume based cost

drivers?

(iii)

Applying the second condition,

what is