Marin Company produces two software products (Cloud-X 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: To
Total Labor Hours
From 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:
Design Programming
Labor and materials (all variable) $ 104,000 $ 68,400
Depreciation and other fixed costs 72,400 4,000
Total $ 176,400 $ 72,400
Required:
1. Determine the total support costs allocated to each of the producing departments using (a) the direct method, (b) the step method (design department goes first), and (c) the reciprocal method? (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)
2. The company is considering outsourcing programming services to DDB Services Inc. for $52.00 per hour. Should Marin do this?
Note: there's 2 requirements , please make sure you do both with explaination :)