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: Proportion of Services Used by Maintenance Cafeteria Machining Assembly Department Machining Assembly Maintenance Cafeteria Direct Costs $130,000 64,000 50,000 40,000 no 0.8 0.2 - 0.4 0.1 0.4 0.1 Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Maintenance. b. The allocations are made in the reverse order (starting with Cafeteria). Complete this question by entering your answers in the tabs below. Required A Required B The order of allocation starts with Maintenance. (Negative amounts should be indicated by a minus sign intermediate calculations.) TO From Maintenance Cafeteria Machining Assembly Service department costs Maintenance Cafeteria Total Costs Required A Required B >

Answer 1

1) Calculate following

	To
From	Maintenance	Cafeteria	Machining	Assembly
Service department costs	50000	40000
Maintenance	-50000	10000	20000	20000
Cafeteria		-50000	25000	25000
Total cost			45000	45000

2) Calculate following

	To
From	Cafeteria	Maintenance	Machining	Assembly
Service department costs	40000	50000
Cafeteria		32000	4000	4000
Maintenance		-82000	41000	41000
Total cost			45000	45000