(Service department allocations) As a team of three or four, select one of the fol¬ lowing types of organizations: hospital or clinic, accounting or law firm, com¬ munity theater, manufacturer, bank, or utility company. Make an appointment with a manager and interview him/her to learn answers to the following ques¬ tions. Prepare a written, oral, or video presentation on your findings.

a. What are the revenue-producing and service departments in the organization?

b. If service department costs were to be allocated to revenue-producing de¬ partments, what would be “reasonable” bases for those allocations and why?

c. Are service department costs allocated to revenue-producing departments in this organization? 1. If yes, how and why are the allocations performed? What are some esti¬ mated costs and benefits of having allocations? 2. If no, why are allocations not performed? What are some estimated costs and benefits of not having allocations?

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