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Rose Richard Company has two products. Product 1 is manufactured entirely in Department X. Product 2 is manufactured in Department Y. To produce these
Rose Richard Company has two products. Product 1 is manufactured entirely in Department X. Product 2 is manufactured in Department Y. To produce these two products the Rose Richard Company has two support departments. Material Handling Department and Power Generating Department. An analysis of the work done by Material Handling and Power Generating Department in a typical period follows: Used By Supplied by Material Handling Power Generating Department X Department Y Material Handling Power generating 150 375 225 600 120 480 The work done by Material Handling Department is measured by the direct labor hours of material handling time. The work done by Power Generating Department is measured by the kilowatt hours per hour. The budgeted costs of the support department for the coming year are as follows: Variable indirect labor and indirect material Material Handling $105,000 costs Supervision $15,000 Depreciation $30,000 Total Costs $150,000 Power Generation $12,000 $12,000 $24,000 $48,000 The budgeted costs of the operating departments for the coming year are $2,250,000 for Department X and $1,200,000 for Department Y. Required: 1. Using the reciprocal method allocate the support costs to the production department.
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