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The Mega 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 Mega 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. 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. Budgeted costs of support departments The budgeted costs of the operating departments for the coming year are $2,500,000 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 19th year of an estimated 25-year useful life; it is old, but well maintained, equipment. 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.) Required 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 Mega 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 Mega accept? Explain. The Mega 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 Mega 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. 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. Budgeted costs of support departments The budgeted costs of the operating departments for the coming year are $2,500,000 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 19th year of an estimated 25-year useful life; it is old, but well maintained, equipment. 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.) Required 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 Mega 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 Mega accept? Explain