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 byDepartmentDirect CostsMaintenanceCafeteriaMachiningAssemblyMachining$130,000 Assembly75,000 Maintenance46,000—0.20.60.2Cafeteria42,0000.7—0.20.1 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.) Cost Allocation To FROMMaintenanceCafeteriaMachiningAssembly service dept. cost Maintenance Cafeteria TOTAL

Reciprocal Method:The Reciprocal method uses simultaneous equation to allocate the costs incurred by…

Answered: Caro Manufacturing has two production…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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	$130,000
Assembly	75,000
Maintenance	46,000	—	0.2	0.6	0.2
Cafeteria	42,000	0.7	—	0.2	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.)

	Cost Allocation To
FROM	Maintenance	Cafeteria	Machining	Assembly
service dept. cost
Maintenance
Cafeteria
TOTAL

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