Question

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 Maintenance Cafeteria Machining Assembly Department Machining Assembly Maintenance Cafeteria Direct Costs $94,000 66,400 41,200 33,000 0.2 0.6 0.1 0.2 0.1 Required: Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.)

Answer 1

Maintenance department costs will be divided between machining and assembly department in the ratio of 0.6:0.2 or 3:1 and cafeteria department costs will be divided between machining and assembly department in the ratio of 0.1:0.1 or 1:1

	Machining	Assembly
Maintenance department	41,200 x 3/4 = 30,900	41,200 x 1/4 = 10,300
Cafeteria department	33,000 x 1/2 = 16,500	33,000 x 1/2 = 16,500

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