Question

[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 Cafeteria Machining Maintenance Assembly Department Machining Assembly Maintenance Cafeteria Direct Costs $108,000 78,400 48,400 39,000 0.8 03 0.2 – 0.6 0.1 0.2 0.1 value: 10.00 points Required information Required: Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.) Total Costs Machining Assembly

Answer 1

Answer

	Total Costs
Machining	$     55,800
Assembly	$     31,600

.Calculated as

Allocation of Service department cost
	Machining	Assembly
Maintenance = To Machining = 48400*0.6/0.8 and to Assembly = 48400 * 0.2/0.8	$        36,300	$        12,100
Cafeteria = To Machining = 39000*0.1/0.2 and to Assembly = 39000* 0.1/0.2	$        19,500	$        19,500
Total allocated cost	$        55,800	$        31,600