Steamco is revlewing 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 Generaliori Fixed Costs Services Used by Variable Equipment Costs Maintenance 0.40 Alpha 0.10 Bela 0.50 Service Department Steam Generation Flectric Generating Fixed costs Variable costs Equipment Maintenance 0.10 0 0.10 020010 0.10 0.30 0.50 0.05 0.55 0.30 D05015 005 Direct costs in thousands) in the various departments follow. Direct Cost $ 200.00 Department Steam Generation (S1) Electric Generating Foxed costs (S2) Variable costs (53) Equipment Maintenance (54) Production Alpha (P1) Beta (P2) 22 50 240.00 132 00 1,600.00 1.200.00 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 Stearico now generates internally. Management rejected switching to the power company on the grounds that its rates would cost more than the $322,500 ($82,500 + $240,000) 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? Direct cost Indirect cost Both b-1. 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) S1. (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.) 5 3 From Amount to be allocated 34 32 P1 P2 Direct department costs Steam generation (51) Equipment maintenance (SA) Electric generating - fixed (S2) Electric generating-variable (53) Total Total cost of company owned system b-2. Should management continue to generate power internally? Yes O No C-1. Assume the company could realize $195,000 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 relevant internal costs C-2. Should management continue to generate power internally? Yes No