Question

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	$	89,000
Assembly		56,400
Maintenance		35,200		—		0.2		0.5		0.3
Cafeteria		28,000		0.8		—		0.1		0.1

Required:

Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.)

	Total Costs Machining Assembly

Answer 1

Allocation of service department cost to producing department

	Maintenance	Cafeteria	Machining	Assembly
Service department cost	35200	28000
Allocation of maintenance	-35200		22000	13200
Allocation of cafeteria		-28000	14000	14000
Total cost			36000	27200