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