Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service...
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Accounting
Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow:
Proportion of Services Used by
Department
Direct Costs
Repair
Quality Control
Fabricating
Finishing
Fabricating
$ 140,600
Finishing
98,200
Repair
42,000
0
0.3
0.4
0.3
Quality Control
78,400
0.3
0
0.2
0.5
Required:
Use the step method to allocate the service costs, using the following:
a. The order of allocation starts with Repair.
b. The allocations are made in the reverse order (starting with Quality Control).
From:
Cost Allocation To:
Repair
Quality Control
Fabricating
Finishing
Service department costs
$42,000
$78,400
Repair
(42,000)
12,600
Quality control
(91,000)
Total costs allocated
$0
$0
$0
$0
From:
Cost Allocation To:
Quality Control
Repair
Fabricating
Finishing
Service department costs
$78,400
$42,000
Quality control
(78,400)
23,520
Repair
(65,520)
Total costs allocated
$0
$0
$0
$0
Answer & Explanation
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