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

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Accounting

a. Caro Manufacturing has two production departments, Machiningand Assembly, and two service departments, Maintenance andCafeteria. Direct costs for each department and the proportion ofservice costs used by the various departments for the month ofAugust follow:

Proportion of Services Used by
DepartmentDirect CostsMaintenanceCafeteriaMachiningAssembly
Machining$98,000
Assembly74,400
Maintenance46,000—0.20.60.2
Cafeteria37,0000.6—0.10.3

Exercise 11-27 (Algo) Cost Allocation: Direct Method (LO11-2)

Required:

Compute the allocation of service department costs to producingdepartments using the direct method. (Do not roundintermediate calculations.)

b. Assume that both Machining and Assembly work on just two jobsduring the month of August: CM-22 and CM-23. Costs are allocated tojobs based on machine-hours in Machining and labor-hours inAssembly. The number of labor- and machine-hours worked in eachdepartment are as follows:

MachiningAssembly
Job CM-22:Machine-hours23060
Labor-hours2020
Job CM-23:Machine-hours2040
Labor-hours30100

Required:
How much of the service department costs allocated to Machining andAssembly in the direct method should be allocated to Job CM-22? Howmuch should be allocated to Job CM-23?

Answer & Explanation Solved by verified expert
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All working forms part of the answer Requirements asked 1 Direct Cost Maintenance Cost Cafetaria Cost Total Costs    See Answer
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