Question

Barstow Manufacturing Company has two service departments — product design and engineering support, and two production departments — assembly and finishing. The distribution of each service department's efforts to the other departments is shown below: FROM TO Design Support Assembly Finishing Design 0 % 10 % 30 % 60 % Support 20 % 0 % 45 % 35 % The direct operating costs of the departments (including both variable and fixed costs) were as follows: Design $ 140,000 Engineering Support $ 160,000 Assembly $ 550,000 Finishing $ 840,000 The total cost accumulated in the finishing department using the direct method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Answer 1

Allocation ratio:
Design = 60%/(30%+60%)	66.6667%
Support = 35%/(45%+35%)	43.7500%
	Finishing
Finishing department direct costs	840000
Design (140000*66.6667%)	93333
Engineering Support (160000*43.75%)	70000
Total cost accumulated in the finishing department	$ 1,003,333