Question

Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow:

Required:

Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.)

Required information [The following information applies to the questions displayed below] Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Proportion of Services Used by Direct Machining Maintenance Cafeteria Assembly Department Machining Assembly Maintenance Costs $99,000 64,400 40,000 32, е00 0.2 e.5 0.3 Cafeteria 0.8 0.1 0.1 Required: Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.) Total Costs Machining Assembly

Answer 1

Answer

• The Requirement is not specifying as whether “TOTAL COST” required to be computed is the Total Allocated Cost OR Total Cost after allocation.
• Hence, I’m providing both the amounts and related workings. Enter the amounts as required.

	Possible ANSWERS
	Total Cost allocated	Total Cost after allocation
Machining	$94,075	$134,075
Assembly	$69,325	$101,325

--Working

	Total Cost allocated
Machining	=+(99000*0.5/0.8)+(64400*0.1/0.2)
Assembly	=+(99000*0.3/0.8)+(64400*0.1/0.2)