Question

In: Accounting

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

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 $ 120,000
Assembly 74,000
Maintenance 53,000 — 0.3 0.5 0.2
Cafeteria 40,000 0.6 — 0.2 0.2

Required:

Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.)

Solutions

Expert Solution

Overheads are allocated as per trial and error method under Reciprocal method

ekkarill92 answered 1 year ago
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