Steamco is reviewing its operations to see what additional energy-saving projects it might adopt. The companys 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:

		Services Used by
Service Department	Steam Generation			Fixed Costs			Variable Costs			Equipment Maintenance			Alpha			Beta
Steam Generation		0			0			0.40			0			0.10			0.50
Electric Generating
Fixed costs		0.10			0			0			0.10			0.30			0.50
Variable costs		0.10			0			0			0.05			0.55			0.30
Equipment Maintenance		0.20			0.10			0.05			0			0.50			0.15

Direct costs (in thousands) in the various departments follow:

Department	Direct Cost
Steam Generation (S1)	$	190.00
Electric Generating:
Fixed costs (S2)		85.00
Variable costs (S3)		225.00
Equipment Maintenance (S4)		136.00
Production
Alpha (P1)		2,000.00
Beta (P2)		1,310.00

Steamco currently allocates costs of 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 $310,000 ($85,000 + $225,000) cost of the present, company-owned, system.

Required:

a. What costs of electric service did management use to prepare the basis for its decision to continue generating power internally? b-1. Prepare for management an analysis of the costs of the companys own electric generating operations. (Use the step method.) The rank order of allocation is (1) S1, (2) S4, (3) S2, and (4) S3. b-2. Should management continue to generate power internally? c-1. Assume the company could realize $181,000 per year from the sale of the steam now used for electric generating after selling costs. Compute the total relevant internal costs for the company. c-2. Should management continue to generate power internally?

Complete this question by entering your answers in the tabs below. Reg A Req B1 Reg 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? Direct cost Indirect costs Both Reg A Req B1 Reg B2 Reg C1 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.) To From Amount to be allocated S4 S2 S3 P1 P2 Direct department costs Steam generation (S1) Equipment maintenance (S4) Electric generating - fixed (S2) Electric generating - variable (S3) Total S 0.00 $ $ 0 $ S 0.00 S 0.00 Total cost of company owned system Reg A Reg Bi Reg B2 Reg C1 Reg C2 Should management continue to generate power internally? Yes ONO Reg A Reg B1 Red B2 Reg C1 Reg C2 Assume the company could realize $181,000 per year from the sale of the steam now used for electric generating after selling costs. Compute the total relevant internal costs for the company. (Enter your answer in thousands of dollars. Round your answer to 2 decimal places.) Total relevent internal costs Reg A Req B1 Reg B2 Reg C1 Reg C2 Should management continue to generate power internally? Yes ONO