Question

Computer retailer Lowest Price Bargains Ltd. (LPBL) sells computers of all models and sizes at low prices. The company can keep its costs down with very careful cost allocation of both its three operating divisions and its three support divisions, which are inter- dependent and consume one another’s resources. The three support divisions are Corporate Treasury, Corporate Human Resource Management (CHRM), and Information Technology (IT). The three core operating divisions are Sales & Marketing, Purchasing, and Consumer Services & Returns. LPBL uses reciprocal cost allocation for its support divisions. A table summarizes the cost pools and the cost allocations among all six divisions:
REQUIRED
1. Use the matrix algebra function in Excel to calculate the inverse of the coefficient matrix for support divisions.
2. Multiply the inverse of the coefficient matrix by the vector of constants to obtain the artificial costs.
3. Calculate the allocation of costs all divisions.


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  • CreatedJuly 31, 2015
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