GENERAL DIRECTION:

Read and analyze the following questions and type your answer in the space provided for each items.

Part I.

Carmichael Manufacturing Company has two production departments (Fabrication and Assembly) and three service departments (General Factory Administration, Factory Maintenance, and Factory Cafeteria). A summary of the year's costs and other data for each department prior to allocation of service department costs appears below.

	Fabrication	General Factory Assembly	Administration	Factory Maintenance	Factory Cafeteria
Labor costs	$1,950,000	$2,050,000	$90,000	82,100	87,000
Material costs	$3,130,000	950,000	---	65,000	91,000
Overhead	$1,650,000	$1,850,000	$70,000	56,100	62,000
Direct labor hours	562,500	437,500	31,000	27,000	42,000
Number of employees	280	200	12	8	20
Square footage occupied	88,000	72,000	1,750	2,000	4,800

The costs of the General Factory Administration Department, Factory Maintenance Department, and Factory Cafeteria are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively.

1. The amount of General Factory Administration Department costs that would be allocated to the Assembly Department under the direct method is (round all final calculations to the nearest dollar):

1. Assuming that Carmichael elects to distribute service department costs to other service departments using the step method of cost allocation and that the order of distribution is based on the dollar amount of costs originating in the service departments, how much of the total Factory Cafeteria cost would be allocated to the Factory Maintenance Department? (Round all final calculations to the nearest dollar.)

Part II.

Acie Company has two service departments and three production departments, each producing a separate product. For a number of years, Acie has allocated the costs of the service departments to the production departments on the basis of the annual sales dollars. In a recent audit report, the internal auditor stated that the distribution of service department costs on the basis of annual sales dollars would lead to serious inequities. It was recommended that maintenance and engineering service hours be used as a better service cost allocation basis. For illustration purposes, the following information was appended to the audit report:

Service Departments	Maintenance	Engineering
Maintenance hours used		400
Engineering hours used	400
Department direct costs	$12,000	$54,000

Production Departments
Department A	Department B	Department C
800	200	200
800	400	400
$80,000	$90,000	$50,000

Using the simultaneous/algebraic method, what would be the total Engineering Department cost after allocation of inter service department costs, but before allocation to the Maintenance and Production Departments?