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

ID: 2557736 • Letter: C

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:

Assume that both Machining and Assembly work on just two jobs during the month of August: CM-22 and CM-23. Costs are allocated to jobs based on machine-hours in Machining and labor-hours in Assembly. The number of labor- and machine-hours worked in each department are as follows:

Required:
How much of the service department costs allocated to Machining and Assembly in the direct method should be allocated to Job CM-22? How much should be allocated to Job CM-23? (Round "Department rate" to 2 decimal places.)

Proportion of Services Used by Department Direct Costs Maintenance Cafeteria Machining Assembly Machining $ 98,000 Assembly 74,400 Maintenance 46,000 — 0.2 0.6 0.2 Cafeteria 37,000 0.6 — 0.1 0.3

Machining Assembly Job CM-22: Machine-hours 230 60 Labor-hours 20 20 Job CM-23: Machine-hours 20 40 Labor-hours 30 100

Explanation / Answer

Machining Assembly Weight Allocation Weight Allocation Total Weight Total Allocation Working Maintenance 46000 0.6 34500 0.2 11500 0.8 46000 0.6/(0.6+0.2)*46000 Cafeteria 37000 0.1 9250 0.3 27750 0.4 37000 0.1/(0.1+0.3)*46000 Total 43750 39250 83000 Machining Assembly Job 22 Hour Cost (hour* rate) Cost (hour* rate) Machine Hour 230 40250 Labor Hour 20 6542 Allocated to Job 22 40250 6542 Job 23 Machine Hour 20 3500 Labor Hour 100 32708 Allocated to Job 23 3500 32708 Total 250 120 Allocated 43750 39250 Per Hour 175 327

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

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

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