Question

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

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
Department Direct Costs Maintenance Cafeteria Machining Assembly
Machining $ 120,000
Assembly 79,000
Maintenance 46,000 0.3 0.5 0.2
Cafeteria 33,000 0.8 0.1 0.1

Required:

Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.) (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)

from maintenance cafeteria machining assembly
service department costs
maintenance
cafeteria
total $0 $0
0 0
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Answer #1

Answer is given below with Repeated distribution method

In Repeated distribution method overhead allocation is done till the Service Department cost gets full allocated to production Department

Caro Manufacturing Repeated Distribution method | Service Department Production Department Maintenance Cafeteria Machining As

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