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 are as follows:| Department | Direct Costs | Proportion of Services Used by ||---------------|--------------|--------------------------------|| | | Maintenance | Cafeteria | Machining | Assembly || Machining | $115,000 | - | - | 0.5 | 0.3 || Assembly | 65,000 | - | - | - | - || Maintenance | 54,000 | - | 0.2 | 0.5 | 0.3 || Cafeteria | 43,000 | 0.7 | - | 0.1 | 0.2 |**Required:**Use the step method to allocate the service costs, using the following:a. The order of allocation starts with Maintenance.b. The allocations are made in the reverse order (starting with Cafeteria).Complete this question by entering your answers in the tabs below.**Required A** The order of allocation starts with Maintenance. *(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)*| From | To | | | ||----------------|-------------------|-----------------|-----------------|-----------------|| | Maintenance | Cafeteria | Machining | Assembly || Service department costs | | | | || Maintenance | | | | || Cafeteria | | | | || Total Costs | | | | | **Title: Service Cost Allocation in Manufacturing**Caro Manufacturing has two production departments: Machining and Assembly, and two service departments: Maintenance and Cafeteria. The following table presents the direct costs for each department and the proportion of service costs used by the various departments for August:| Department | Direct Costs | Proportion of Services Used by ||--------------|--------------|--------------------------------------|| | | Maintenance | Cafeteria | Machining | Assembly || Machining | $115,000 | - | - | 0.5 | 0.3 || Assembly | $65,000 | - | - | 0.3 | 0.2 || Maintenance | $54,000 | - | 0.2 | 0.5 | 0.3 || Cafeteria | $43,000 | 0.7 | - | 0.1 | 0.2 |**Required Tasks:**Use the step method to allocate service costs as follows:a. Start with Maintenance for allocation.b. Reverse order allocation starting with Cafeteria. **Detailed Instructions:**Complete the required tasks by entering your answers accordingly.**Reverse Allocation Procedure:**Start from the Cafeteria. Negative amounts should be indicated with a minus sign; do not round intermediate calculations.**Cost Allocation Table:**| From | To ||---------------|---------------------------------|| | Cafeteria | Maintenance | Machining | Assembly || Service Costs | | | | || Cafeteria | | | | || Maintenance | | | | || Total Costs | | | | |Use this structured approach to systematically distribute the indirect costs across the departments, ensuring precise financial reporting and decision-making in the organization.

Step down method - under this method the cost of service department is not only allocated to…

Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Department Machining Assembly Maintenance Cafeteria Direct Costs $115,000 65,000 54,000 43,000 Required A Required B Proportion of Services Used by Machining Maintenance Cafeteria 0.7 From Service department costs Maintenance Cafeteria Total Costs 0.2 Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Maintenance. o. The allocations are made in the reverse order (starting with Cafeteria). 0.5 0.1 Complete this question by entering your answers in the tabs below. Maintenance Cafeteria Assembly The order of allocation starts with Maintenance. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) To 0.3 0.2 Machining Assembly

Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Department Machining Assembly Maintenance Cafeteria Direct Costs $115,000 65,000 54,000 43,000 Required A Required B Proportion of Services Used by Machining Maintenance Cafeteria 0.7 From Service department costs Maintenance Cafeteria Total Costs 0.2 Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Maintenance. o. The allocations are made in the reverse order (starting with Cafeteria). 0.5 0.1 Complete this question by entering your answers in the tabs below. Maintenance Cafeteria Assembly The order of allocation starts with Maintenance. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) To 0.3 0.2 Machining Assembly

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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es 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: Department. Machining Assembly Maintenance Cafeteria Required A Direct Costs $135,000 85,000 47,000 36,000 Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Maintenance. b. The allocations are made in the reverse order (starting with Cafeteria). Complete this question by entering your answers in the tabs below. Required B Required A Proportion of Services Used by Maintenance. Cafeteria. Machining Assembly 0.7 The order of allocation starts with Maintenance. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Required B Required: Use the step method to allocate the service costs, using the following: a. The…
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