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 Direct Department Machining Assembly Maintenance Cafeteria Costs Maintenance Cafeteria Machining Assembly $92,000 62,400 38,800 31,000 e.2 0.6 0.2 e.8 e.1 e.1 Required: Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.) Total Costs Machining Assembly 29,100 $

Answer 1

Solution 1:

Support department cost allocation - Direct method
Particulars	Machining	Assembly
Maintenance (6:2)	$29,100.00	$9,700.00
Cafeteria (1:1)	$15,500.00	$15,500.00
Total	$44,600.00	$25,200.00

Solution 2:

Computation of Service department cost allocation to Jobs
Particulars	Job CM-22	Job CM-23
Machining (300:30)	$40,545	$4,055
Assembly (30:150)	$4,200	$21,000
Total	$44,745	$25,055