A cardiology clinic has five centers, three of which are cost centers, and the remaining two are cost and revenue centers. The cost centers have  no of trips for Transport center Square feet for Housekeeping center and pounds for Laundry center as the bases for cost allocations. The direct costs and the relative  weights for the selected bases are given in the table below. 

 

Front Desk House Keeping Laundry

Cost Centers Direct Costs trips Square feet Pounds

Nonrevenue Centers

Transport

House Keeping

Laundry

Revenue Centers

CCU

Pharmacy

a Allocate the overheads of the three nonrevenue centers to revenue centers by direct method. Find the individual total costs for CCU and for Pharmacy.

b Allocate the overheads of the three nonrevenue centers to revenue centers by Step method, starting with Front Desk then House Keeping and then Laundry. Find the individual total costs for CCU and for Pharmacy.