Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Redvein Company has two products

Redvein Company has two products

Accounting

Redvein 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, Valley Company has two service 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: Services provided by: Departments A B X 250 100 Y 150 400 A 500 B 100 The work done in department A is measured by the direct labor-hours of materials-handling time. The work done in department B is measured by the kilowatt-hours of power. The budgeted costs of the service departments for the coming year are as follows: Department A (Materials Handling) $ 70,000 Department B (Power Generation) $10,000 Variable indirect labor and Indirect materials costs Supervision 10,000 10,000 Depreciation 20.000 20.000 $100,000 $40,000 The budgeted costs of the producing departments for the coming year are $1,500,000 for department X and $800,000 for department Y. Supervision costs are salary costs, related to manufacturing of products. Depreciation in department B is the straight-line depreciation of power-generation equipment in its 19th year of Supervision costs are salary costs, related to manufacturing of products. Depreciation in department B is the straight-line depreciation of power-generation equipment in its 19th year of TELLO an estimated 25-year useful life; it is old, but well maintained equipment. Required : 1. What are the allocations of costs of service departments A and B to operating departments X and Y using (a) the direct method, (b) the step method (allocate A first), (c) the simultaneous method? 2. An outside company has offered to supply all the power needed by the Valley Company and to provide all the services of the present power department. The cost of this service will be $35 per kilowatt-hour of power. Should Valley accept? Explain.

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Related Questions