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:
Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.)
| Proportion of Services Used by | |||||||||||
| Department | Direct Costs | Maintenance | Cafeteria | Machining | Assembly | ||||||
| Machining | $ | 120,000 | |||||||||
| Assembly | 74,000 | ||||||||||
| Maintenance | 53,000 | — | 0.3 | 0.5 | 0.2 | ||||||
| Cafeteria | 40,000 | 0.6 | — | 0.2 | 0.2 | ||||||
Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.)
