Question

Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafet
Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Main
Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Main
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  • Requirement a

From

Maintenance

Cafetaria

Machining

Assembly

Service Deaprtment Costs

$53,000

$35,000

$125,000

$71,000

Maintenance [0.3 + 0.5 + 0.2 = 1]

($53,000)

$15,900

$26,500

$10,600

Cafetaria [0.1 + 0.1 = 0.2]

($50,900)

$25,450

$25,450

Total Costs

$0

$0

$176,950

$107,050

--Working

From

Maintenance

Cafetaria

Machining

Assembly

Service Deaprtment Costs

53000

35000

125000

71000

Maintenance [0.3 + 0.5 + 0.2 = 1]

-53000

=53000*0.3/1

=53000*0.5/1

=53000*0.2/1

Cafetaria [0.1 + 0.1 = 0.2]

=-35000-15900

=50900*0.1/0.2

=50900*0.1/0.2

  • Requirement b

From

Maintenance

Cafetaria

Machining

Assembly

Service Deaprtment Costs

$53,000

$35,000

$125,000

$71,000

Cafetaria [0.8 + 0.1 + 0.1 = 1]

$28,000

($35,000)

$3,500

$3,500

Maintenance [0.5 + 0.2 = 0.7]

($81,000)

$57,857

$23,143

Total Costs

$0

$0

$186,357

$97,643

--Working

From

Maintenance

Cafetaria

Machining

Assembly

Service Deaprtment Costs

53000

35000

125000

71000

Cafetaria [0.8 + 0.1 + 0.1 = 1]

=35000*0.8/1

-35000

=35000*0.1/1

=35000*0.1/1

Maintenance [0.5 + 0.2 = 0.7]

=-53000-28000

=81000*0.5/0.7

=81000*0.2/0.7

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