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Quartzite Inc. has two production departments, Cutting and Polishing, and two service departments, Electricity and...

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Accounting

Quartzite Inc. has two production departments, Cutting and Polishing, and two service departments, Electricity and Water. Electricity renders 20% of its services to Water, 20% to Cutting, and 60% to Polishing, while Water renders 40% of its services to Electricity, 30% to Cutting, and 30% to Polishing. Total costs before allocation are $100,000 for Electricity and $200,000 for Water. You are the manager of the Polishing department.

1.Upper management has decided to use the step down method (allocating Electricity first). How much service department cost would be allocated to your department? (SHOW COMPUTATIONS)

2. Write out the two equations that would need to be solved under the reciprocal method. (DO NOT SOLVE THE PROBLEM JUST LIST THE TWO EQUATIONS).

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