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Exercise 11-30 (Static) Cost Allocation: Step Method (LO 11-3) Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria.

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Exercise 11-30 (Static) Cost Allocation: Step Method (LO 11-3) 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 by Maintenance Cafeteria Machining Assembly Department Machining Assembly Maintenance Cafeteria Direct Costs $99,000 64,400 40,000 32,000 0.2 0.5 0.1 0.3 0.1 0.8 Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Maintenance. b. The allocations are made in the reverse order (starting with Cafeteria). Required A Required B The order of allocation starts with Maintenance. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Machining Assembly From Service department costs Maintenance Cafeteria Total Costs Maintenance $ 40,000 (40,000) Cafeteria $ 32,000 8,000 (40,000) $ 0 20,000 20,000 40,000 12,000 20,000 32,000 $ 0 $ $ Required A Required B > Required A Required B The allocations are made in the reverse order (starting with Cafeteria). (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Assembly From Service department costs Cafeteria Maintenance Total Costs Cafeteria Maintenance Machining $ 32,000 $ 40,000 25,600 X (32,000) 3,200 (57,600) 41,000 $ 0 $ 8,000 $ 44,200 3,200 24,600 27,800

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