Problem - 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 venous departments for the month of August follow:
|
Department
|
Direct Costs
|
Proportion of Services Used by
|
|
Maintenance
|
Cafeteria
|
Machining
|
Assembly
|
|
Machining
|
$95,000
|
|
|
|
|
|
Assembly
|
68,400
|
|
|
|
|
|
Maintenance
|
42,400
|
-
|
0.2
|
0.6
|
0.2
|
|
Cafeteria
|
34,000
|
0.8
|
-
|
0.1
|
0.1
|
Required: Compute the allocation of service department costs to producing departments using the direct method.