aro 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 $ 140,000 Assembly 80,000 Maintenance 47,000 — 0.2 0.5 0.3 Cafeteria 38,000 0.8
aro 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 $ 140,000 Assembly 80,000 Maintenance 47,000 — 0.2 0.5 0.3 Cafeteria 38,000 0.8
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 11-32 (Algo) Cost Allocation: Reciprocal Method (LO 11-4)
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 | $ | 140,000 | |||||||||
| Assembly | 80,000 | ||||||||||
| Maintenance | 47,000 | — | 0.2 | 0.5 | 0.3 | ||||||
| Cafeteria | 38,000 | 0.8 | — | 0.1 | 0.1 | ||||||
Required:
Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.) (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)
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