Exercise 11-27 (Static) Cost Allocation: Direct Method (LO 11-2) PDF

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Summary

Learning Objective:
11-02 Allocate
service department
costs using the direct
method....

Description

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0/0

Points

100

%

[The following information applies to the questions displayed below.]  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

  Direct Costs $99,000  64,400  40,000  32,000 

Proportion of Services Used by Maintenance Cafeteria Machining           —  0.2  0.5 0.8  —  0.1

Exercise 11-27 & 11-28 (Static) (LO 11-2)

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Assembly   0.3 0.1

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2.

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Award:

Required: Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.) Total Costs Machining

$

41,000



Assembly

$

31,000

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 References Worksheet

Difficulty: 2 Medium

Exercise 11-27 (Static) Cost Allocation: Direct Method (LO 11-2)

Learning Objective: 11-02 Allocate service department costs using the direct method.

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Required: Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.)

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Total Costs Machining

$

41,000

Assembly

$

31,000

 Explanation: Direct Method: To Maintenance Cafeteria Total Costs

Machining $25,000a 16,000b $41,000

Assembly $15,000 16,000 $31,000

a

$25,000 =

0.5 0.5 + 0.3

× $40,000

b

$16,000 =

0.1 0.1 + 0.1

× $32,000

(Note that the use of Maintenance’s costs by Cafeteria and the use of Cafeteria costs by Maintenance are ignored.) ...