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:

The order of allocation starts with Maintenance. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

The allocations are made in the reverse order (starting with Cafeteria). (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

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:

Explanation / Answer

(a) & (b)

   Proportion of Services Used by Department Direct Costs Maintenance Cafeteria Building A Building B   Building A $ $485,000 $ 485,000 $ 312,000   Building B $312,000   Maintenance $194,000 — $         -   0.2 $38,800 0.4 $ 77,600 0.4 $ 77,600   Cafeteria $150,000 0.8 $120,000 — $       -   0.1 $ 15,000 0.1 $ 15,000 $ 577,600 $ 404,600

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