Question

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

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 $ 103,000
Assembly 72,400
Maintenance 44,800 0.2 0.6 0.2
Cafeteria 36,000 0.6 0.2 0.2

Required:

Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.)

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Answer #1

Allocation

Maintenance cafeteria Machining Assembly
Service department cost 44800 36000
Allocation of maintenance -44800 0 33600 11200
Allocation of cafeteria 0 -36000 18000 18000
Allocated cost 0 0 51600 29200
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