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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.

Accounting Basics, Accounting

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