- Analysis of the work done by departments A and B Used by Supplied by A B Y 420 1,050 630 B 1,530 255 765 The work done in department A is measured by the direct labour-hours of materials-handling time. The work done in department B is measured by the kilowatt-hours of power. Print Done The Moore Company has two products. Product 1 is manufactured entirely in department X. Product 2 is manufactured entirely in department Y. To produce these two products, the Moore Company has two support departments: A (a materials-handling department) and B (a power-generating department). An analysis of the work done by departments A and B in a typical period follows. : (Click the icon to view analysis of the work done by departments A and B.) The budgeted costs of the support departments for the coming year are as follows. (Click the icon to view the budgeted costs of the support departments.) Required Click the icon to see the Worked Solution. Budgeted costs of support departments Requirement 1. What are the allocations of costs of support departments A and B to operating dep first), (c) the step-down method (allocate department B first), and (d) the reciprocal method. Department A (Materials Handling) Department B (Power Generation) (a) the direct method Variable indirect labour and indirect material costs Using the direct method, allocate the support-department costs. (Do not round interim calculations, decreasing departments by allocating costs.) S 330,000 $ 30,600 51,000 A B 99,000 33,000 Supervision Depreciation Y 100.000 Costs to be allocated Allocate A S 462,000 $ 181,600 + Materials-handling costs Allocate B + Power costs Total The budgeted costs of the operating departments for the coming year are $2,600,000 for department X and $1,900,000 for department Y. Supervision costs are salary costs. Depreciation in department B is the straight-line depreciation of power-generation equipment in its 19th year of an estimated 25-year useful life; it is old, but well maintained, equipment Required Print Done 1. What are the allocations of costs of support departments A and B to operating departments X and Y using (a) the direct method, (b) the step-down method (allocate department A first), (c) the step-down method (allocate department B first), and (d) the reciprocal method (use the linear equation method)? 2. An outside company has offered to supply all the power needed by the Moore Company and to provide all the services of the present power department. The cost of this service will be $85 per kilowatt-hour of power. Should Moore accept? Explain Clear All Check