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Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service...

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Accounting

Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow:

Proportion of Services Used by
Department Direct Costs Repair Quality Control Fabricating Finishing
Fabricating $ 140,600
Finishing 98,200
Repair 42,000 0 0.3 0.4 0.3
Quality Control 78,400 0.3 0 0.2 0.5

Required:

Use the step method to allocate the service costs, using the following:

a. The order of allocation starts with Repair.

b. The allocations are made in the reverse order (starting with Quality Control).

From: Cost Allocation To:
Repair Quality Control Fabricating Finishing
Service department costs $42,000 $78,400
Repair (42,000) 12,600
Quality control (91,000)
Total costs allocated $0 $0 $0 $0
  • From: Cost Allocation To:
    Quality Control Repair Fabricating Finishing
    Service department costs $78,400 $42,000
    Quality control (78,400) 23,520
    Repair (65,520)
    Total costs allocated $0 $0 $0 $0

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