Analysis of the Work Done by Departments A and B

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. of the support departments for the coming year are as follows.

Budgeted Costs of Support Departments

$\backslash$table$[[,\backslash$table$[[$Department A $($Materials$],[$Handling$)]],\backslash$table$[[$Department B $($Power$],[$Generation$)]]],[\backslash$table$[[$Variable indirect labour$],[$and indirect material$],[$costs$]],312,000,60,000],[$Supervision$,93,600,100,000],[$Depreciation$,31,200,100,000],[$Total$,436,800,260,000],[,+$ Power costs,$+$ Materials$-$handling costs$],[\backslash$table$[[$The budgeted costs of the operating departments for the coming year are$],[$$$2,600,000$ for department x and $$2,000,000$ for department Y$.$ Supervision costs$],[$are salary costs. Depreciation in department B is the straight$-$line depreciation$],[$of power$-$generation equipment in its $19$th year of an estimated $25-$year useful life;$],[$it is old, but well maintained, equipment.$]]]]$

direct method

nearest whole Required

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$)?$

An outside company has offered to supply all the power needed by the

Magical 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 Magical accept? Explain.Requirement $1.$ 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 $($alloc

the step$-$down method $($allocate department B first$),$ and $($d$)$ the reciprocal method.

$($a$)$ the direct method

Using the direct method, allocate the support$-$department costs. $($Do not round interim calculations, and round your answers to the nearest whole dollar. Use parentheses or a mi

departments by allocating costs.$)$The Magical 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 Magical 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.

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.

liew the budaeted costs of the subport departments.

Read the requirements.

Requirement $1.$ 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.

$($a$)$ the direct method

Using the direct method, allocate the support$-$department costs. $($Do not round interim calculations, and round your answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing

departments by allocating costs.$)$