Woodbury Hospital has three service departments and three operating departments. Estimated cost and operating data for all
Question:
Woodbury Hospital has three service departments and three operating departments. Estimated cost and operating data for all departments in the hospital for the forthcoming quarter are presented in the table below:
The costs of the service departments are allocated by the step-down method using the allocation bases and in the order shown in the following table:
Service Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allocation Bases
Housekeeping Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Square feet of space
Food Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Meals served
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Files processed
All billing in the hospital is done through Laboratory, Radiology, or General Hospital. The hospital’s administrator wants the costs of the three service departments allocated to these three billing centers.
Required:
Using the step-down method, prepare the cost allocation desired by the hospital administrator. Include under each billing center the direct costs of the center, as well as the costs allocated from the service departments.
Step by Step Answer:
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer