a. Caro Manufacturing has two production departments, Machiningand Assembly, and two service departments, Maintenance andCafeteria. Direct costs for each department and the proportion ofservice costs used by the various departments for the month ofAugust follow:
| | | | Proportion of Services Used by |
| Department | Direct Costs | Maintenance | Cafeteria | Machining | Assembly |
| Machining | $ | 98,000 | | | | | | | | | |
| Assembly | | 74,400 | | | | | | | | | |
| Maintenance | | 46,000 | | — | | 0.2 | | 0.6 | | 0.2 | |
| Cafeteria | | 37,000 | | 0.6 | | — | | 0.1 | | 0.3 | |
|
Exercise 11-27 (Algo) Cost Allocation: Direct Method (LO11-2)
Required:
Compute the allocation of service department costs to producingdepartments using the direct method. (Do not roundintermediate calculations.)
b. Assume that both Machining and Assembly work on just two jobsduring the month of August: CM-22 and CM-23. Costs are allocated tojobs based on machine-hours in Machining and labor-hours inAssembly. The number of labor- and machine-hours worked in eachdepartment are as follows:
| | Machining | Assembly |
| Job CM-22: | Machine-hours | 230 | | 60 | |
| Labor-hours | 20 | | 20 | |
| Job CM-23: | Machine-hours | 20 | | 40 | |
| Labor-hours | 30 | | 100 | |
|
Required:
How much of the service department costs allocated to Machining andAssembly in the direct method should be allocated to Job CM-22? Howmuch should be allocated to Job CM-23?
