King Khan Corporation (KKC) manufactures kongs and kangs, the production of which requires considerable energy. The costs of the Power Generation Department amounted to $4 million in February, for a total of 50 million kilowatt hours (kwh) supplied to the plant. Analysis shows that 40% of power generation costs are fixed. In February, the Kong Department made 5 million kongs, each using 4 kwh; the Kang Department made 4 million kangs, each using 6 kwh.

Required:

1.If KKC uses the simplest algorithm to allocate power costs, what is the total power generation costs charged to the Kong Department and the Kang Department in February?

2.In March, the Power Generation Department costs amounted to $4.3 million for 51 million kwh. Kong Department's usage and production were the same, but the Kang Department increased output to 4.1 million kangs, each using the standard power allowance. If KKC employs an insulating cost allocation mechanism, and fixed costs are shared equally, what are the total costs charged to the Kong Department and the Kang Department in March?

3.Outline the advantages and disadvantages of the two systems in parts (1) and (2). Be specific in terms of the context and do not simply re-write the textbook.