During November, Ajax Company's actual cost of operating its power plant was $12,800, of which $6,000 was considered a fixed cost. The schedule of horsepower-hours for the benefiting user departments is as follows:

Required:
(1) Compute the dollar amounts of power plant cost to be allocated to each producing and service department. Fixed cost is allocated on the basis of the power plant's readiness to serve.
(2) Critique the method used here to allocate power department cost to users.

Transcribed Image Text:

Producing Departments Department A Department B Service Departments Department X Needed at full capacity. 10,000 Used during November... 20,000 13,000 12,000 7,000 Department Y 8,000 6,000 8,000