Problem 11-58 (Static) Cost Allocation: Step Method with Analysis and Decision Making (LO 11-3) Steamco is reviewing its operations to see what additional energy-saving projects it might adopt. The company's manufacturing plant generates its own electricity using a process capturing steam from its production processes. A summary of the use of service departments by other service departments as well as by the two producing departments at the plant follows. Steam Generation Fixed Costs Services Used by Variable Equipment Costs Maintenance 0.40 Alpha 0.10 Beta 0.se Service Department Steam Generation Electric Generating Fixed costs Variable costs Equipment Maintenance 0.10 0.10 0.10 e. 20 B 0.10 8.05 0 3.30 0.55 0.50 9.50 8.30 0.15 0.05 Direct costs in thousands) in the various departments follow Direct Cost $ 210 90 Department Steam Generation (S1) Electric Generating: Fixed costs (52) Variable costs (53) Equipment Maintenance (54) Production Alpha (P1 Beta (P2) 200 144 1,800 1,320 Steamco currently allocates costs or service departments to production departments using the step method. The local power company indicates that it would charge $480,000 per year for the electricity that Steamco now generates internally Management rejected switching to the power company on the grounds that its rates would cost more than the $330,000 ($90,000 + $240,000) cost of the present, company-owned, system Req A Req B1 Req B2 Reg ci Reg C2 What costs of electric service did management use to prepare the basis for its decision to continue generating power internally? O Direct cost O Indirect costs Both Reg Req B1 > Req A Reg B1 Reg B2 Regci Reg C2 Prepare for management an analysis of the costs of the company's own electric generating operations. Use the step method.) The rank order of allocation is (1) Si, (2) S4, (3) S2, and (4) S3. (Do not round Intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers in thousands of dollars rounded to 2 decimal places.) Show less lo From Amount to be Allocated S4 52 S3 21 P2 Direct department costs Steam generation (S1) Equipment maintenance (S4) Electric generating - fixed (S2) Electric generating - variable (S3) Total Total cost of company owned system