Question
A clinic has two revenue departments (Lab and Patient Care) and two support departments (Admin and Janitorial) with information shown below. Admin is allocated based
A clinic has two revenue departments (Lab and Patient Care) and two support departments (Admin and Janitorial) with information shown below. Admin is allocated based on number of employees and Janitorial is allocated based on square footage.
| Admin | Janitorial | Lab | Patient | Total | |
| Direct Overhead | $350,000 | $50,000 | $200,000 | $600,000 | $1,200,000 |
| number of employees | 2 | 3 | 5 | 10 | |
| square foot | 1000 | 1,000 | 3000 | 5000 |
Required: Compute the allocations to the Lab and Patient using the following methods showing the allocation percentages:
PLEASE SHOW HOW TO SOLVE
- Sequential allocating Admin first.
- Reciprocal
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Introduction To Corporate Finance
Authors: Laurence Booth, Sean Cleary
3rd Edition
978-1118300763, 1118300769
