Question
Northern Medical Clinic (NMC) has two service departments Building Services and Energy. NMC also has three operating departments Pediatrics, Geriatrics and Surgery. NMC allocates the
Northern Medical Clinic (NMC) has two service departments Building Services and Energy. NMC also has three operating departments Pediatrics, Geriatrics and Surgery. NMC allocates the Building Services department costs on the basis of square metres and the Energy department costs on the basis of kilowatt hours. Pediatrics applies overhead based on the number of children seen. Geriatrics applies overhead based on the number of seniors seen. Surgery applies overhead based on the number of operations performed.
The following table contains budgeted operating data for the upcoming year:
| Service Departments | Operating Departments | |||
| Building Services |
Energy |
Pediatrics |
Geriatrics |
Surgery |
Overhead before allocation | $800,000 | $400,000 | $360,000 | $240,000 | $400,000 |
Square metres | 10,000 | 20,000 | 11,000 | 15,400 | 17,600 |
Kilowatt hours | 5,000 | 10,000 | 15,000 | 55,000 | 30,000 |
Children |
|
| 5,000 |
|
|
Seniors |
|
|
| 4,000 |
|
Operations |
|
|
|
| 10,000 |
Required:
1. | Allocate service department costs to the operating departments using the step-down method. Calculate the predetermined overhead rate for each operating department. (8 marks) Enter negative numbers using a minus sign.
| |||||
| Service Departments | Operating Departments | ||||
| Building Services |
Energy |
Pediatrics |
Geriatrics |
Surgery | |
Overhead before allocation | $800,000 | $400,000 | $360,000 | $240,000 | $400,000 | |
|
|
|
|
|
| |
|
|
|
|
|
| |
Total after allocation | $ | $ | $ | $ | $ | |
|
|
|
| |||
Predetermined overhead rate | $ | $ | $ |
2. |
|
|
Pediatrics |
Geriatrics |
Surgery |
| $ | $ | $ |
|
|
|
|
Overhead applied | $ | $ | $ |
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