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

a. 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	$	98,000
Assembly		74,400
Maintenance		46,000	—	0.2	0.6	0.2
Cafeteria		37,000	0.6	—	0.1	0.3

Exercise 11-27 (Algo) Cost Allocation: Direct Method (LO 11-2)

Required:

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

b. 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:

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

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?

Solutions

Expert Solution

>All working forms part of the answer

Requirements asked

[1]

	Direct Cost	Maintenance Cost		Cafetaria Cost		Total Costs = ANSWER
Machining	$98,000	$34,500	[46000 x 0.6/0.8]	$9,250	[$37000 x 0.1/0.4]	$141,750
Assembly	$74,400	$11,500	[46000 x 0.2/0.8]	$27,750	[$37000 x 0.3/0.4]	$113,650

--Workings

	Machining	Assembly
Total Cost	$141,750	$113,650
Allocation base	Machine hours	Labor hours
Amount of allocation base	250	120
Allocation rate	$ 567.00	$ 947.08

[2]

	Job CM 22		Job CM 23		Total Answer
Machining	$130,410.00	[230 MHs x $ 567]	$11,340.00	[20 MHs x $ 567]	141,750.00
Assembly	$18,941.60	[20 LHs x $ 947.08]	$94,708.00	[100 LHs x $ 947.08]	113,649.60
Answer	$149,351.60		$106,048.00

ekkarill92 answered 4 months ago

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