The Def Leppard Company has 2 service departments (A and B) and two production departments (P1...

 

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The Def Leppard Company has 2 service departments (A and B) and two production departments (P1 and P2). Department A allocates service costs using machine hours. Department B allocates costs using kilowatt hours. Variable costs are $60,000 in Department A and $40,000 in Department B. For the most recent period, there are 2,000 machine hours in Department A, 4,000 in Department B, 6,000 in Department P1 and 10,000 in Department P2. For the most recent period, there are 1,500 kilowatt hours in Department A, 500 in Department B, 3,000 in Department P1 and 5,500 in Department P2. If the company outsourced Department B, how many kilowatt hours would the company have to purchase from an outside supplier? QUESTION 4 Refer to question 3. If all of the costs in question 3 are variable costs, as given, compute the relevant internal cost of keeping Department B rather than outsourcing it. In other words, how much internal cost could we save if we outsourced Department B? Do not put a dollar sign in your answer. The Def Leppard Company has 2 service departments (A and B) and two production departments (P1 and P2). Department A allocates service costs using machine hours. Department B allocates costs using kilowatt hours. Variable costs are $60,000 in Department A and $40,000 in Department B. For the most recent period, there are 2,000 machine hours in Department A, 4,000 in Department B, 6,000 in Department P1 and 10,000 in Department P2. For the most recent period, there are 1,500 kilowatt hours in Department A, 500 in Department B, 3,000 in Department P1 and 5,500 in Department P2. If the company outsourced Department B, how many kilowatt hours would the company have to purchase from an outside supplier? QUESTION 4 Refer to question 3. If all of the costs in question 3 are variable costs, as given, compute the relevant internal cost of keeping Department B rather than outsourcing it. In other words, how much internal cost could we save if we outsourced Department B? Do not put a dollar sign in your answer.

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3 Dept B uses 500 kilowatt hours Hence if company outsou... View the full answer