Question

Warren Ltd. has two production departments, Building A and Building B, 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 June follow:

				Proportion of Services Used by
Department	Direct Costs			Maintenance		Cafeteria		Building A		Building B
Building A	$	480,000
Building B		327,000
Maintenance		182,000		—		0.1		0.7		0.2
Cafeteria		178,000		0.7		—		0.2		0.1

Required:

(a)

Use the step method to allocate the service costs, the order of allocation starts with Maintenance. (Do not round intermediate calculations. Round your answers to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

	To
From	Maintenance	Cafeteria	Building A	Building B
Service department costs	$	$	$	$
Maintenance
Cafeteria
Total Costs	$	$	$	$

(b)

Use the step method to allocate the service costs, the allocations are made in the reverse order (starting with Cafeteria). (Do not round intermediate calculations. Round your answers to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

	To
From	Cafeteria	Maintenance	Building A	Building B
Service department costs	$	$	$	$
Cafeteria
Maintenance
Total Costs	$	$	$	$

Answer 1