Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria....

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Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafet

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Answer 1

Answer #1

Solution:

Maintenance cost = $48,000 + 0.7 Cafeteria cost

Cafeteria cost = $35,000 + 0.2 Maintenance cost

Cafeteria cost = $35,000 + 0.2 ($48,000 + 0.7 Cafeteria cost)

= $44,600 / 0.86 = $51,860

Maintenance cost = $48,000 + 0.7*$51,860 = $84,302

	Cost Allocation To:
From:	Maintenance	Cafeteria	Machining	Assembly
Service department costs	$48,000	$35,000
Maintenance	-$84,302	$16,860	$42,151	$25,291
Cafeteria	$36,302	-$51,860	$10,372	$5,186
Total	$0	$0	$52,523	$30,477

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Answer 2

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