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$107,000Assembly80,400Maintenance49,6000.20.50.3Cafeteria40,0000.80.10.1

Assume that both Machining and Assembly work on just two jobs during the month of August: CM-22 and CM-23. Costs are allocated to jobs based on machine-hours in Machining and labor-hours in Assembly. The number of 

labor- and machine-hours worked in each department are as follows:

 

MachiningAssemblyJob CM-22:Machine-hours35020Labor-hours2060Job CM-23:Machine-hours5040Labor-hours20140

Required:

How much of the service department costs allocated to Machining and Assembly in the direct method should be allocated to Job CM-22? How much should be allocated to Job CM-23?

Answer rating: 100% (QA)

To allocate service department costs to jobs using the direct method we will first allocate the serv... View the full answer