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

			Proportion of Services Used by
Department	Direct Costs		Maintenance	Cafeteria	Machining	Assembly
Machining	$	108,000
Assembly		78,400
Maintenance		48,400	—	0.2	0.6	0.2
Cafeteria		39,000	0.8	—	0.1	0.1

Required:

Compute the allocation of service department costs to producing departments using the direct method.

Solutions

Expert Solution

Machining	$ 55,800.00
Assembly	$ 31,600.00

Working :

	Maintenance	Cafeteria	Machining	Assembly
Service Department Cost	$ 48,400.00	$ 39,000.00	$ -	$ -
Maintenance	$ (48,400.00)		$ 36,300.00 (48400*0.6/(0.6+0.2))	$ 12,100.00 (48400*0.2/(0.6+0.2))
Cafeteria		$ (39,000.00)	$ 19,500.00 (39000*0.1/(0.1+0.1))	$ 19,500.00 (39000*0.1/(0.1+0.1))
Total			$ 55,800.00	$ 31,600.00

ekkarill92 answered 1 year ago

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