Caro Manufacturing has two production departments, Machining and Assembly, and t

Question

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: Machining Assembly Department Machining Direct Costs Maintenance Cafeteria $105,000 70,000 50,000 38,000 0.4 0.1 0.2 Maintenance Cafeteria 0.4 0.2 0.7 Required Use the step method to allocate the service costs, using the following a. The order of allocation starts with Maintenance. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) 0 From Maintenance Cafeteria Machining Assembly Service department costs Maintenance Cafeteria Total Costs b. The allocations are made in the reverse order (starting with Cafeteria). (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) 0 From Cafeteria Maintenance Machining Assembly Service department costs Cafeteria Maintenance Total Costs

Explanation / Answer

a Allocoation of costs to From maintenance cafeteria Machining Assembly service department costs 50000 38000 105000 70000 maintenance -50000 10000 20000 20000 20:40:40 cafeteria 26600 -38000 7600 3800 70:20:10 total costs 26600 10000 132600 93800 b Allocoation of costs to From cafeteria maintenance Machining Assembly service department costs 38000 50000 105000 70000 maintenance -50000 10000 20000 20000 20:40:40 cafeteria 26600 -38000 7600 3800 70:20:10 total costs 14600 22000 132600 93800

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