Warren Ltd. has two production departments, Building A and Building B, and two s

Question

Warren Ltd. has two production departments, Building A and Building B, 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 June follow:

required:
part A: use the step method to allocate the service costs using the order of allocation starts with maintenance
part B: use the step method to allocate the service costs using the allocations are made in reverse order starting with cafeteria
CRUCIAL: please along with the answers provide calculations with how you got each answer thank you

Chapter 11 Service Department and Joint Cost Allocation Proportion of Services Used by artmen Direct Costs Maintenance Cafeteria Building A Building B DepartmenDirect Costs $495,000 322,000 Maintenance 200,000 Building A Building B 0.2 0.5 0.1 0.3 0.1 Cafeteria... 160,000 0.8 nt rosts to producing departments using th

Explanation / Answer

Part A Proportion of service used by

Department Direct cost Maintenance cafeteria Building A BuildingB

Maintenance $200000 (200000 -200000) 200000*0.2/1 200000*0.5/1 200000*0.3/1

= 0 = $40000 = $100000 = $60000

Cafeteria $160000 $200000*0.8 (160000 + $40000) 200000*0.1 200000*0.1

=$160000 $200000 - $200000 =0 =$20000 =$20000

  

Part B Proportion of service used by   

Department Direct cost Maintenance cafeteria Building A BuildingB

Cafeteria 160000 160000*0.8 160000-160000 160000 * 0.1 160000*0.1

=$128000 =0 = $16000 =$16000

Maintenance 200000 200000+128000 328000 * 0.2 328000* 0.5 328000* 0.3

328000-328000 =0 =$65600 =164000 =$98400

  

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