Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct
Question:
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 DepartmentDirect CostsMaintenanceCafeteriaMachiningAssemblyMachining$107,000Assembly80,400Maintenance49,6000.20.50.3Cafeteria40,0000.80.10.1
Required:
Compute the allocation of service department costs to producing departments using the direct method.
Butterfly Corp. manufactures products M1 and M2 from a joint process, which also yields a by-product, B1. Butterfly accounts for the revenues from its by-product sales as other income. Additional information follows:
M1M2B1TotalUnits produced28,80013,3009,60051,700Allocated joint costs???$343,000Sales value at split-off$366,000$244,000$91,000$701,000
Required:
Assuming that joint product costs are allocated using the net realizable value at split-off approach, what was the joint cost allocated to product M1