DIRECT METHOD

Service Dept. A
Production Dept. X 40 0.666666667 150 100
Production Dept. Y 20 0.333333333 150 50
60 150
Service Dept. B
Production Dept. X 70 0.875 300 262.5
Production Dept. Y 10 0.125 300 37.5
80 300

STEP METHOD

Service Dept. B
Production Dept. X 70 0.7 300 210
Production Dept. Y 10 0.1 300 30
Service Dept. A 20 0.2 300 60
100 300
Service Dept. A
Production Dept. X 40 0.666666667 210 140
Production Dept. Y 20 0.333333333 210 70
60 210

ALGEBRAIC METHOD
A = 150 + .20B
B = 300 + .40A

A = 150 + .20(300 + .40A)

A = 150 + 60 + .08A
0.92A = 210
A= 228.2608695652

B= 391.3043478261

A B X Y
A 228.26 91.30 91.30 45.65
B 391.30 78.26 273.91 39.13
619.57 78.26 91.30 365.22 84.78
(169.57) (78.26) (91.30)
450.00 0.00 0.00
 A B X Y Total
5,000 6,000
DIRECT METHOD 0 0 362.5 87.5 450
STEP METHOD 0 0 350 100 450
ALGEBRAIC 0 0 365.22 84.78 450
6,078 6,272