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Problem - 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 venous departments for the month of August follow:
Department
Direct Costs
Proportion of Services Used by
Maintenance
Cafeteria
Machining
Assembly
$95,000
68,400
42,400
-
0.2
0.6
34,000
0.8
0.1
Required: Compute the allocation of service department costs to producing departments using the direct method.
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