Problems

$[$LO $7-1,7-3]$

Note regarding rounding errors: Many of the problems in this chapter require a series of calculations. Rounding errors can accumulate and affect totals unless each calculation is carried to a recommended four or more digits after the decimal point. If you are using a calculator, make sure all your calculations are done to $4$ or more digits after the decimal. To avoid rounding errors entirely, use a spreadsheet package like Excel to set up and solve these problems.

$7-34$ Departmental Cost Allocation; Outsourcing Marin Company produces two software products $($CloudX and Cloud$-$Y$)$ in two separate departments $($ A and B$).$ These products are highly regarded network maintenance programs. Cloud$-$X is used for small networks and Cloud$-$Y is used for large networks. Marin is known for the quality of its products and its ability to meet dates promised for software upgrades.

Department A produces Cloud$-$X$,$ and department B produces Cloud$-$Y$.$ The production departments are supported by two support departments, systems design and programming services. The sources and uses of the support department time are summarized as follows:

$\backslash$table$[[$From$,$To$,\backslash$table$[[$Total$],[$Labor Hours$]]],[$Design$,$Programming,Department A$,$Department B$],[$Design$,-,5,000,1,000,9,000,15,000],[$Programming$,400,-,600,1,000,2,000]]$

The costs in the two service departments are as follows:

$\backslash$table$[[,$Design,Programming$],[$Labor and materials $($all variable$),$$$50,000,$$$36,000$